Public Storage 2001 Annual Report Download - page 31

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P
UBLIC S TORAGE ,I NC . 2001 A NNUAL R EPORT
In December 2001, the Company loaned $35,000,000 to PSB. This loan bears interest at the rate of 3.25% per year. All
outstanding principal and accrued and unpaid interest shall be repaid on June 30, 2002; however, PSB may make prepayments
in whole or in part at any time without penalty. This loan, which was repaid in full on January 28, 2002 (unaudited), was included
in Notes Receivable at December 31, 2001.
Note 11 — Stock Options
The Company has a 1990 Stock Option Plan (the “1990 Plan”) which provides for the grant of non-qualified stock options. The
Company has a 1994 Stock Option Plan (the “1994 Plan”), a 1996 Stock Option and Incentive Plan (the “1996 Plan”) and a 2000
Non-Executive/Non-Director Stock Option and Incentive Plan (the “2000 Plan”), each of which provides for the grant of non-
qualified options and incentive stock options. (The 1990 Plan, the 1994 Plan, the 1996 Plan and the 2000 Plan are collectively
referred to as the “PSI Plans”). Under the PSI Plans, the Company has granted non-qualified options to certain directors, officers
and key employees to purchase shares of the Company’s common stock at a price equal to the fair market value of the common
stock at the date of grant. Generally, options under the Plans vest over a three-year period from the date of grant at the rate of
one-third per year and expire (i) under the 1990 Plan, five years after the date they became exercisable and (ii) under the 1994
Plan, the 1996 Plan and the 2000 Plan, ten years after the date of grant. The 1996 Plan and the 2000 Plan also provide for the
grant of restricted stock to officers, key employees and service providers on terms determined by an authorized committee of the
Board of Directors; no shares of restricted stock have been granted. In connection with the Storage Trust merger in March 1999,
we assumed the outstanding non-qualified options under the Storage Trust Realty 1994 Share Incentive Plan (the “Storage Trust
Plan”), which were converted into non-qualified options to purchase our common stock (the PSI Plans and the Storage Trust Plan
are collectively referred to as the “Plans”). The Company determined there was no material impact from the use of the fair value
method for the years ended December 31, 2001, 2000 and 1999.
Information with respect to the Plans during 2001, 2000 and 1999 is as follows:
2001 2000 1999
Number Average Number Average Number Average
of Price per of Price per of Price per
Options Share Options Share Options Share
Options outstanding January 1 6,412,576 $23.65 3,024,274 $24.08 2,054,285 $22.85
Granted or assumed 1,776,500 27.93 3,762,500 23.06 1,576,626 24.39
Exercised (704,901) 22.50 (242,598) 18.99 (511,989) 19.53
Canceled (806,841) 24.51 (131,600) 26.01 (94,648) 27.28
Options outstanding December 31 6,677,334 24.81 6,412,576 23.65 3,024,274 $24.08
$14.88 $14.13 $9.38
Option price range at December 31
(a)
to $34.68 to $33.56 to $33.56
Options exercisable at December 31 2,618,889 $24.14 1,680,083 $23.83 1,259,771 $21.97
Options available for grant at
December 31 4,563,512 33,171 1,683,505
(a) Approximately 6,532,334, 6,362,575 and 2,967,274 of options outstanding at December 31, 2001, 2000 and 1999, had exercise prices
less than $30.
In 1996, the Company adopted the disclosure requirement provision of SFAS 123 in accounting for stock-based compensation
issued to employees. As of December 31, 2001, 2000 and 1999 there were 6,675,667, 6,372,741 and 2,935,338 options
outstanding, respectively, that were subject to SFAS 123 disclosure requirements. The Company follows Accounting Principles
Board Opinion 25, “Accounting for Stock Issued to Employees”, (“APB 25”) to account for employee stock options. An alternative
method of accounting for stock options is Financial Accounting Standards Board Statement No. 123 (“SFAS 123”). Under SFAS
123, employee stock options are valued at grant date, and this expense is recognized ratably over the vesting period, rather than
including the dilutive impact of stock options in weighted average shares outstanding – diluted as the Company does in following
APB 25. Had the Company computed compensation cost with respect to SFAS 123, net income would have been $320,032,000,