Stamps.com 2004 Annual Report Download - page 53

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F-18
STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS (continued)
Options granted under the 1999 Plan generally vest 25% per year, and the Board of Directors has the
discretion with respect to vesting periods applicable to a particular grant. Each option granted has a 10 year
contractual life. On November 3, 2004, the Company issued options to purchase 1,000,000 shares of common stock
vesting immediately at a price of $17.50, representing an exercise price that was $3.14 higher than the fair market
value on the date of grant of $14.36. During 2004, 2003 and 2002, the Company issued options to purchase a total of
1,220,626, 422,475 and 865,250 shares of common stock, respectively, at prices at or above the market price at the
date of grant.
A summary of stock option activity is as follows (in thousands, except per share amounts):
Options
Outstanding
Number of
Options
Weighted
Average
Exercise Price
Balance at December 31, 2001 ............................................................................... 1,781 $ 15.52
Granted .............................................................................................................. 866 8.84
Forfeited............................................................................................................. (94) 28.78
Exercised............................................................................................................ (390) 4.34
Balance at December 31, 2002 ............................................................................... 2,163 12.20
Granted .............................................................................................................. 423 11.02
Forfeited............................................................................................................. (167) 14.12
Exercised............................................................................................................ (133) 4.02
Balance at December 31, 2003 ............................................................................... 2,286 12.20
Granted .............................................................................................................. 1,221 16.54
Forfeited............................................................................................................. (75) 15.42
Exercised............................................................................................................ (224) 6.20
Balance at December 31, 2004 ............................................................................... 3,208 $ 14.28
The weighted-average fair value of stock grants for the years ended December 31, 2004, 2003 and 2002
using the Black-Scholes valuation method are as follows:
2004 2003 2002
Weighted-average fair value of stock options with
an exercise price equal to the market price on
the grant date...................................................................................... $ 6.06 $ 3.40 $ 2.76
Weighted-average fair value of stock options with
an exercise price greater than the market price on the
grant date............................................................................................ 5.76
—
—
Total................................................................................................. $ 5.81 $ 3.40 $ 2.76
Weighted average exercise prices for 2004 stock options are as follows:
2004
Weighted-average exercise price of stock options with
an exercise price equal to the market price on the
grant date ............................................................................................................................................. $ 12.20
Weighted-average exercise of stock options with an
exercise price greater than the market price on
the grant date ....................................................................................................................................... 17.50
Total .................................................................................................................................................. $ 16.54