Washington Post 2001 Annual Report Download - page 20

THE WASHINGTON POST COMPANY
thereof have no voting rights except with respect to any proposed
changes in the preferences and special rights of such stock.
GCAPITAL STOCK, STOCK AWARDS, AND STOCK OPTIONS
Capital Stock. Each share of Class A common stock and Class B com-
mon stock participates equally in dividends. The Class B stock has
limited voting rights and as a class has the right to elect 30 percent
of the Board of Directors; the Class A stock has unlimited voting
rights, including the right to elect a majority of the Board of Directors.
During 2001, 2000, and 1999, the Company purchased a total of 714,
200, and 744,095, shares, respectively, of its Class B common stock
at a cost of approximately $445,000, $96,000, and $425,865,000.
Stock Awards. In 1982, the Company adopted a long-term incentive
compensation plan, which, among other provisions, authorizes the
awarding of Class B common stock to key employees. Stock awards
made under this incentive compensation plan are subject to the gen-
eral restriction that stock awarded to a participant will be forfeited
and revert to Company ownership if the participant’s employment ter-
minates before the end of a specified period of service to the
Company. At December 30, 2001, there were 70,775 shares
reserved for issuance under the incentive compensation plan. Of this
number, 29,895 shares were subject to awards outstanding, and
40,880 shares were available for future awards. Activity related to
stock awards under the long-term incentive compensation plan for
the years ended December 30, 2001, December 31, 2000, and
January 2, 2000 was as follows:
2001 2000 1999
Number Average Number Average Number Average
of Award of Award of Award
Shares Price Shares Price Shares Price
Awards Outstanding
Beginning of year.. 30,165 $413.28 31,360 $412.86 30,730 $405.40
Awarded....... 16,865 608.96 1,155 501.72 2,615 543.02
Vested......... (15,200) 364.13 (99) 330.75 (167) 349.00
Forfeited....... (1,935) 555.02 (2,251) 456.41 (1,818) 479.90
End of year....... 29,895 $539.25 30,165 $413.28 31,360 $412.86
In addition to stock awards granted under the long-term incentive
compensation plan, the Company also made stock awards of 3,300
shares in 2001, 1,950 shares in 2000, and 1,750 shares in 1999.
For the share awards outstanding at December 30, 2001, the
aforementioned restriction will lapse in 2002 for 1,446 shares, in
2003 for 15,799 shares, in 2004 for 2,450 shares, and in 2005 for
18,430 shares. Stock-based compensation costs resulting from
stock awards reduced net income by $2.6 million ($0.27 per share,
basic and diluted), $2.4 million ($0.25 per share, basic and diluted),
and $2.2 million ($0.22 per share, basic and diluted), in 2001, 2000,
and 1999, respectively.
Stock Options. The Company’s employee stock option plan, which
was adopted in 1971 and amended in 1993, reserves 1,900,000
shares of the Company’s Class B common stock for options to be
granted under the plan. The purchase price of the shares covered
by an option cannot be less than the fair value on the granting date.
At December 30, 2001, there were 486,700 shares reserved for
issuance under the stock option plan, of which 170,575 shares were
subject to options outstanding, and 316,125 shares were available
for future grants.
Changes in options outstanding for the years ended December 30,
2001, December 31, 2000, and January 2, 2000 were as follows:
2001 2000 1999
Number Average Number Average Number Average
of Option of Option of Option
Shares Price Shares Price Shares Price
Beginning of year.. 166,450 $465.55 156,497 $470.64 246,072 $404.48
Granted........ 24,000 522.75 89,500 544.90 3,750 516.36
Exercised...... (16,875) 276.79 (20,425) 345.46 (87,825) 288.43
Forfeited....... (3,000) 546.04 (59,122) 643.71 (5,500) 450.86
End of year...... 170,575 $490.86 166,450 $465.55 156,497 $470.64
Of the shares covered by options outstanding at the end of 2001,
89,388 are now exercisable, 30,313 will become exercisable in 2002,
25,562 will become exercisable in 2003, 19,312 will become exer-
cisable in 2004, and 6,000 will become exercisable in 2005.
Information related to stock options outstanding at December 30,
2001, is as follows:
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/30/01 Life (yrs.) Price at 12/30/01 Price
$ 222–299 13,500 2.7 251.11 13,500 251.11
344 11,500 5.0 343.94 11,500 343.94
472–484 30,825 6.6 473.93 25,950 472.57
500–596 114,750 8.7 538.34 38,438 535.66
All options were granted at an exercise price equal to or greater than
the fair market value of the Company’s common stock at the date of
grant. The weighted average fair value for options granted during
2001, 2000, and 1999 was $107.78, $161.15, and $157.77, respec-
tively. The fair value of options at date of grant was estimated using
the Black-Scholes method utilizing the following assumptions:
2001 2000 1999
Expected life (years)........ 777
Interest rate................. 2.30% 5.98% 6.19%
Volatility..................... 19.46% 17.9% 16.0%
Dividend yield............... 1.1% 1.0% 1.1%