Health Net 2002 Annual Report Download - page 71

HEALTH NET, INC. | 69
subject to customary covenants, loans were initiated on a
bid or committed basis and carried interest at offshore or
domestic rates, at the applicable LIBOR Rate plus margin
or the bank reference rate. Actual rates on borrowings
under the credit facility varied, based on competitive bids
and our unsecured credit rating at the time of the
borrowing. The maximum amount outstanding under the
previous credit facility during 2001 was $766 million.
NOTE 7—Stock Option and Employee Stock
Purchase Plans
We have various stock option plans which cover certain
employees, officers and non-employee directors, and an
employee stock purchase plan under which substantially all of
our full-time employees are eligible to participate. The stock-
holders have approved these plans except for the 1998 Stock
Option Plan which was adopted by our Board of Directors.
During 2002, the stockholders approved the 2002 Stock
Option Plan. During 2002, we issued 80,000 shares of
restricted stock (see Note 2). During the second quarter ended
June 30, 2002, certain option grants under the 1997 and
1998 plans became vested as a result of our stock attaining
a closing market price of $25 for 20 consecutive trading
days pursuant to an acceleration clause in the plans.
Under our various employee stock option plans and
our non-employee director stock option plan, we grant
options at prices at or above the fair market value of the
stock on the date of grant. The options carry a maximum
term of up to 10 years and in general vest ratably over
three to five years, except for certain option grants under
the 1997 and 1998 plans where vesting is accelerated by
virtue of attaining certain performance targets. We have
reserved a total of 21.9 million shares of our Class A
Common Stock for issuance under the stock option plans.
As of December 31, 2002, 3.0 million outstanding options
had accelerated vesting provisions.
Under our Employee Stock Purchase Plan, we provide
employees with the opportunity to purchase stock through
payroll deductions. Eligible employees may purchase on a
monthly basis our Class A Common Stock at 85% of the
lower of the market price on either the first or last day of
each month.
Stock option activity and weighted average exercise prices for the years ended December 31 are presented below:
2002 2001 2000
Weighted Average Weighted Average Weighted Average
Number of Options Exercise Price Number of Options Exercise Price Number of Options Exercise Price
Outstanding at January 1 13,106,184 $18.25 12,219,782 $17.83 12,284,417 $20.47
Granted 4,873,731 23.74 5,439,036 22.79 3,932,353 9.54
Exercised (3,504,250) 13.57 (820,247) 11.52 (314,384) 17.73
Canceled (1,707,816) 21.40 (3,732,387) 25.05 (3,682,604) 17.86
Outstanding at December 31 12,767,849 $21.06 13,106,184 $18.25 12,219,782 $17.83
Exercisable at December 31 5,567,079 3,364,436 4,890,364
The following table summarizes the weighted average exercise price and weighted average remaining contractual life for
significant option groups outstanding at December 31, 2002:
Options Outstanding Options Exercisable
Weighted Average
Remaining Contractual Weighted Average Weighted Average
Range of Exercise Prices Number of Options Life (Years) Exercise Price Number of Options Exercise Price
$6.69 – $11.63 1,547,883 5.50 $ 8.77 1,109,735 $ 9.26
12.00 – 12.94 1,407,739 1.96 12.93 1,407,406 12.93
13.81 – 22.63 1,585,851 8.11 20.75 381,253 18.07
22.64 – 22.88 2,345,663 9.48 22.64 37,500 22.80
23.02 3,091,203 7.49 23.02 1,246,879 23.02
23.49 – 36.25 2,789,510 6.94 28.99 1,384,306 31.33
$6.69 – $36.25 12,767,849 6.95 $21.06 5,567,079 $19.45