Prudential 2005 Annual Report Download - page 136

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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
15. STOCK-BASED COMPENSATION (continued)
The following table summarizes information about the employee stock options outstanding and employee stock options
exercisable at December 31, 2005:
Options Outstanding Options Exercisable
Number
Outstanding
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise
Price
Range of exercise prices:
$27.50 — $29.81 ................................................ 2,891,072 6.18 $27.61 2,664,044 $27.57
$29.90 — $33.95 ................................................ 8,630,979 6.82 31.80 7,108,026 32.20
$34.10 — $45.00 ................................................ 4,286,150 8.09 44.81 1,377,397 44.70
$45.18 — $76.00 ................................................ 3,998,253 9.06 55.68 40,730 46.56
Total .......................................................... 19,806,454 7.46 $38.82 11,190,197 $32.69
Non-employee Stock Option Grants
A summary of the status of the Company’s non-employee stock option grants is as follows:
Shares
Weighted
Average
Exercise
Price
Outstanding at December 31, 2002 ................................................................. 863,827 $28.14
Granted ...................................................................................... 163,159 28.61
Exercised ..................................................................................... (68,100) 27.65
Forfeited ..................................................................................... (71,116) 27.59
Expired ...................................................................................... — —
Transfer from employee status .................................................................... 77,586 27.55
Outstanding at December 31, 2003 ................................................................. 965,356 28.25
Granted ...................................................................................... 112,707 45.92
Exercised ..................................................................................... (354,717) 28.26
Forfeited ..................................................................................... (69,596) 29.48
Expired ...................................................................................... — —
Transfer from employee status .................................................................... 105,450 27.79
Outstanding at December 31, 2004 ................................................................. 759,200 30.68
Granted ...................................................................................... 98,901 57.03
Exercised ..................................................................................... (242,158) 29.49
Forfeited ..................................................................................... (24,654) 37.20
Expired ...................................................................................... — —
Transfer from employee status .................................................................... 10,581 55.33
Outstanding at December 31, 2005 ................................................................. 601,870 $35.66
Options exercisable were 301,517 shares with a weighted average exercise price of $28.11 at December 31, 2005, 517,978
shares with a weighted average exercise price of $27.80 at December 31, 2004 and 495,397 shares with a weighted average exercise
price of $27.85 at December 31, 2003. The weighted average fair value for nonvested options and options vesting during the year
was $28.99, $22.19, and $14.80 for the years ended December 31, 2005, 2004 and 2003, respectively.
In 2003, the Company implemented a binomial option-pricing model. The fair value of each option under the binomial model
was estimated on the balance sheet date for nonvested options and on the vesting date for any option vesting during 2003, 2004 and
2005. Prior to January 1, 2003, the fair value of each option was estimated on the balance sheet date for nonvested options and on
the vesting date for vested options using a Black-Scholes option-pricing model.
Prudential Financial 2005 Annual Report134