Freddie Mac 2005 Annual Report Download - page 144

unit holders who are employees as and when dividends on common stock are declared or (b) which are accrued as
additional restricted stock units for non-employee directors.
‚ Restricted stock entitles participants to all the rights of a stockholder, including dividends, except that the shares
awarded are subject to a risk of forfeiture and may not be disposed of by the participant until the end of the restriction
period established at the time of grant.
ESPP: We have established a stockholder-approved ESPP, which was amended and restated as of January 1, 2005,
that is qualiÑed under Internal Revenue Code Section 423. Under the ESPP, substantially all full-time and part-time
employees that choose to participate in the ESPP have the option to purchase shares of common stock at speciÑed dates,
with an annual maximum market value of $20,000 per employee as determined on the subscription (grant) date. The
purchase price is equal to 85 percent of the lower of the average price (average of the daily high and low prices) of the stock
on the subscription date or the average price of the stock on the purchase (exercise) date.
On November 4, 2004, stockholders approved the amendment and restatement of the ESPP eÅective as of January 1,
2005. The restated ESPP authorized granting 3.6 million shares in addition to the 3.2 million shares remaining under the
former ESPP. At December 31, 2005, the maximum number of shares of common stock authorized for grant to employees,
including those additional shares granted in accordance with the amended and restated ESPP, totaled 6.8 million shares, of
which approximately 0.2 million shares had been issued and approximately 6.6 million shares remained available for grant.
At December 31, 2005, 2004 and 2003, no options were exercisable under the ESPP, as the options outstanding at year-end
become exercisable subsequent to year-end, and are exercised or forfeited during the subsequent year.
2004 Employee Plan: Under the stockholder-approved 2004 Employee Plan, we may grant employees stock-based
awards, including stock options, restricted stock units and restricted stock. In addition, we have the right to impose
performance conditions with respect to these awards. Under the 2004 Employee Plan, employees may also be granted stock
appreciation rights; however, at December 31, 2005, no stock appreciation rights had been granted under the 2004
Employee Plan. At December 31, 2005, the maximum number of shares of common stock authorized for grant to employees
in accordance with the 2004 Employee Plan totaled 13.8 million shares, of which approximately 1.8 million shares had been
issued and approximately 12.0 million shares remained available for grant.
Directors' Plan: Under the stockholder-approved Directors' Plan, which was amended and restated in 1998, we are
permitted to grant to non-employee directors stock options, restricted stock units and restricted stock. At December 31,
2005, the maximum number of shares of common stock authorized for grant to directors in accordance with the Directors'
Plan totaled 2.4 million shares, of which approximately 0.8 million shares had been issued and approximately 1.6 million
shares remained available for grant.
See ""NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,'' for a description of the accounting
treatment for employee stock-based compensation, including grants under the ESPP, Employee Plans and Directors' Plan.
Table 11.1 provides a summary of activity related to the option to purchase stock under the ESPP.
Table 11.1 Ì ESPP Activity
Year Ended December 31,
2005 2004 2003
Options to Weighted Options to Weighted Options to Weighted
Purchase Average Exercise Purchase Average Exercise Purchase Average Exercise
Stock Price Stock Price Stock Price
Outstanding, beginning of yearÏÏÏÏÏÏÏÏÏÏÏÏÏ 60,416 $56.83 65,257 $48.08 1,000,370 $52.27
GrantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 258,061 53.58 250,899 53.40 145,866 44.16
Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (239,873) 52.78 (244,625) 50.53 (355,485) 41.76
Forfeited or expired ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (17,020) 53.22 (11,115) 50.77 (725,494) 43.02
Outstanding, end of yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 61,584 52.16 60,416 56.83 65,257 48.08
Weighted-average fair value of options
granted during year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 11.56 $ 11.23 $ 10.72
128 Freddie Mac