Hess 2002 Annual Report Download - page 39

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Total compensation expense for nonvested common stock was
$7 million in 2002, $12 million in 2001 and $7 million in 2000.
Awards of nonvested common stock were as follows:
Shares of
nonvested Weighted-
common stock average
awarded price on date
(thousands) of grant
Granted in 2000 519 $ 59.65
Granted in 2001 108 67.25
Granted in 2002 21 66.29
At December 31, 2002, the number of common shares reserved for
issuance is as follows (in thousands):
1995 Long-Term Incentive Plan
Future awards 937*
Stock options outstanding 4,375
Stock appreciation rights 15
Total 5,327
*In February 2003, the Corporation awarded 742,500 shares of non-vested common stock.
10. Foreign Currency Translation
Foreign currency gains amounted to $10 million and $7 million after
income taxes in 2002 and 2001. In 2000, after-tax foreign currency
gains amounted to $45 million, including a gain of $53 million
related to the termination of the proposed acquisition of another
oil company.
The balance in accumulated other comprehensive income related to
foreign currency translation was a reduction in stockholders’ equity
of $107 million at December 31, 2002 compared with a reduction of
$141 million at December 31, 2001.
The Corporation’s stock option activity in 2002, 2001 and 2000
consisted of the following:
Weighted-
average
Options exercise price
(thousands) per share
Outstanding at January 1, 2000 4,507 $ 56.18
Granted 870 60.39
Exercised (1,082) 54.41
Outstanding at December 31, 2000 4,295 57.47
Granted 1,674 60.91
Exercised (1,053) 56.28
Forfeited (42) 61.79
Outstanding at December 31, 2001 4,874 58.87
Granted 46 66.45
Exercised (492) 57.81
Forfeited (53) 59.79
Outstanding at December 31, 2002 4,375 $59.06
Exercisable at December 31, 2000 3,425 $56.73
Exercisable at December 31, 2001 3,216 57.85
Exercisable at December 31, 2002 4,329 58.99
Exercise prices for employee stock options at December 31, 2002
ranged from $49.19 to $84.61 per share. The weighted-average
remaining contractual life of employee stock options is 7 years.
The Corporation uses the Black-Scholes model to estimate the fair
value of employee stock options for pro forma disclosure of the effects
on net income and earnings per share. The Corporation used the fol-
lowing weighted-average assumptions in the Black-Scholes model for
2002, 2001 and 2000, respectively: risk-free interest rates of 4.2%,
4.1% and 5.4%; expected stock price volatility of .262, .244 and .225;
dividend yield of 1.9%, 2.0% and 1.0%; and an expected life of seven
years. The Corporation’s net income would have been reduced by
approximately $14 million in 2002 and 2001 and $17 million in 2000
if option expense were recorded using the fair value method.
The weighted-average fair values of options granted for which the
exercise price equaled the market price on the date of grant were
$19.63 in 2002, $16.20 in 2001 and $20.04 in 2000.
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