Lockheed Martin 2015 Annual Report Download - page 108

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At December 31, 2015, inclusive of the shares reserved for outstanding stock options, RSUs and PSUs, we had
approximately 15 million shares reserved for issuance under the plans. At December 31, 2015, approximately 7 million of the
shares reserved for issuance remained available for grant under our stock-based compensation plans. We issue new shares
upon the exercise of stock options or when restrictions on RSUs and PSUs have been satisfied.
RSUs
The following table summarizes activity related to nonvested RSUs during 2015:
Number
of RSUs
(In thousands)
Weighted Average
Grant-Date Fair
Value Per Share
Nonvested at December 31, 2012 4,822 $ 79.10
Granted 1,356 89.24
Vested (2,093) 79.26
Forfeited (226) 81.74
Nonvested at December 31, 2013 3,859 $ 82.42
Granted 745 146.85
Vested (2,194) 87.66
Forfeited (84) 91.11
Nonvested at December 31, 2014 2,326 $ 97.80
Granted 595 192.47
Vested (1,642) 103.30
Forfeited (43) 132.28
Nonvested at December 31, 2015 1,236 $ 134.87
In January 2015, we granted certain employees approximately 0.6 million restricted stock units (RSUs) with a grant-date
fair value of $192.28 per RSU. The grant-date fair value of these RSUs is equal to the closing market price of our common
stock on the grant date less a discount to reflect the delay in payment of dividend-equivalent cash payments that are made
only upon vesting, which is generally three years from the grant date. We recognize the grant-date fair value of RSUs, less
estimated forfeitures, as compensation expense ratably over the requisite service period, which is shorter than the vesting
period if the employee is retirement eligible on the date of grant or will become retirement eligible before the end of the
vesting period.
Stock Options
We generally recognize compensation cost for stock options ratably over the three-year vesting period. At December 31,
2015 and 2014, there were 4.2 million (weighted average exercise price of $86.61) and 6.3 million (weighted average
exercise price of $84.62) stock options outstanding. Stock options outstanding at December 31, 2015 have a weighted
average remaining contractual life of approximately four years and an aggregate intrinsic value of $544 million. Of the stock
options outstanding, 4.2 million (weighted average exercise price of $86.61) have vested as of December 31, 2015 and those
stock options have a weighted average remaining contractual life of approximately four years and an aggregate intrinsic
value of $544 million. There were 2.2 million (weighted average exercise price of $80.77) stock options exercised during
2015. We did not grant stock options to employees during 2015 and 2014.
The following table pertains to stock options granted in 2012, in addition to stock options that vested and were exercised
in 2015, 2014 and 2013 (in millions, except for weighted-average grant-date fair value of stock options granted):
2015 2014 2013
Weighted average grant-date fair value of stock options granted $— $— $—
Grant-date fair value of all stock options that vested 818 40
Intrinsic value of all stock options exercised 265 297 293
In 2012, we estimated the fair value for stock options at the date of grant using the Black-Scholes option pricing model,
which required us to make certain assumptions. We used the following weighted average assumptions in the model: risk-free
interest rate of 0.78%, dividend yield of 5.40%, a five year historical volatility factor of 0.28 and an expected option life of
five years.
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