Stamps.com 2006 Annual Report Download - page 59

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STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS
10. Employee Stock Plans – (continued)
In no event will this annual increase exceed 782,358 shares. In addition, no participant in the 1999 Plan may be granted stock options or
direct stock issuances for more than 562,500 shares of common stock in total in any calendar year.
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 2006, 2005 and 2004, the Company issued options to purchase a total of
318,500, 265,500 and 1,220,626 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):
The weighted-average fair value of stock grants for the years ended December 31, 2006, 2005 and 2004 using the Black-Scholes valuation
method are as follows:
Weighted average exercise prices for 2006 stock options are as follows:
F-19
Options
Outstanding
Weighted
Average
Exercise Price
Number of
Options
Balance at January 1, 2004
2,286
12.20
Granted
1,221
16.54
Forfeited
(75
)
15.42
Exercised
(213
)
6.20
Balance at December 31, 2004
3,219
$
14.28
Granted
265
18.89
Forfeited
(180
)
15.67
Exercised
(696
)
9.25
Balance at December 31, 2005
2,608
$
15.03
Granted
319
27.53
Forfeited
(74
)
22.48
Exercised
(656
)
11.66
Balance at December 31, 2006
2,197
17.56
2006 2005 2004
Weighted-average fair value of stock options with an exercise
price equal to the market price on the grant date
$
13.41
$
9.20
$
6.06
Weighted-average fair value of stock options with an exercise
price greater than the market price on the grant date
—
7.93
5.76
Total
$
13.41
$
9.10
$
5.81
2006
Weighted-average exercise price of stock options with an exercise price
equal to the market price on the grant date
$
8.15
Weighted-average exercise price of stock options with an exercise price
greater than the market price on the grant date
17.50
Total weighted
-
average exercise price
$
11.66