Washington Post 2003 Annual Report Download - page 69

subject to the general restriction that stock awarded to a participant become exercisable in 2006, and 1,250 will become exercisable
will be forfeited and revert to Company ownership if the partici- in 2007. Information related to stock options outstanding at Decem-
pant's employment terminates before the end of a specified period ber 28, 2003 is as follows:
of service to the Company. At December 28, 2003, there were
Weighted
54,520 shares reserved for issuance under the incentive compen- Average Weighted Weighted
sation plan. Of this number, 29,845 shares were subject to awards Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
outstanding, and 24,675 shares were available for future awards. Exercise Prices at 12/28/03 Life (yrs.) Price at 12/28/03 Price
Activity related to stock awards under the long-term incentive
$222Ó299 6,500 1.4 $263.83 6,500 $263.83
compensation plan for the years ended December 28, 2003, 344 7,600 3.0 343.94 7,600 343.94
December 29, 2002 and December 30, 2001, was as follows: 472Ó484 20,000 4.8 474.47 18,594 473.99
500Ó596 102,875 6.9 538.94 75,781 535.11
2003 2002 2001 693 500 9.5 692.51 Ì Ì
Number Average Number Average Number Average 729 10,500 9.0 729.00 2,625 729.00
of Award of Award of Award 816 4,500 10.0 816.05 Ì Ì
Shares Price Shares Price Shares Price
All options were granted at an exercise price equal to or greater
Beginning of year ÏÏÏÏ 27,625 $536.74 29,895 $539.25 30,165 $413.28 than the fair market value of the Company's common stock at the
AwardedÏÏÏÏÏÏÏÏÏ 15,990 734.01 215 563.36 16,865 608.96
date of grant. The weighted average fair value for options granted
VestedÏÏÏÏÏÏÏÏÏÏÏ (12,752) 523.60 (601) 540.61 (15,200) 364.13
Forfeited ÏÏÏÏÏÏÏÏÏ (1,018) 658.44 (1,884) 578.37 (1,935) 555.02 during 2003, 2002 and 2001 was $229.81, $197.89 and
End of yearÏÏÏÏÏÏÏÏÏ 29,845 $643.89 27,625 $536.74 29,895 $539.25 $107.78, respectively. The fair value of options at date of grant
was estimated using the Black-Scholes method utilizing the following
In addition to stock awards granted under the long-term incentive assumptions:
compensation plan, the Company also made stock awards of
1,050 shares in 2003, 2,150 shares in 2002 and 3,300 shares in 2003 2002 2001
2001. Expected life (years)ÏÏÏÏÏÏÏÏÏÏÏ 777
Interest rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.38% 3.69% 2.30%
For the share awards outstanding at December 28, 2003, the
VolatilityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.43% 21.74% 19.46%
aforementioned restriction will lapse in 2004 for 2,732 shares, in
Dividend yieldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.71% 0.77% 1.1%
2005 for 16,929 shares, in 2006 for 1,588 shares, and in 2007
for 16,460 shares. Stock-based compensation costs resulting from Refer to Note A for additional disclosures surrounding stock option
stock awards reduced net income by $3.9 million ($0.41 per accounting.
share, basic and diluted), $3.5 million ($0.37 per share, basic
The Company also maintains a stock option plan at its Kaplan
and diluted), and $2.6 million ($0.27 per share, basic and
subsidiary that provides for the issuance of Kaplan stock options to
diluted) in 2003, 2002 and 2001, respectively.
certain members of Kaplan's management. The Kaplan stock option
Stock Options. The Company's employee stock option plan plan was adopted in 1997 and initially reserved 15 percent, or
reserves 1,900,000 shares of the Company's Class B common 150,000 shares, of Kaplan's common stock for options to be
stock for options to be granted under the plan. The purchase price granted under the plan. Under the provisions of this plan, options
of the shares covered by an option cannot be less than the fair are issued with an exercise price equal to the estimated fair value of
value on the granting date. At December 28, 2003, there were Kaplan's common stock, and options vest ratably over five years.
454,350 shares reserved for issuance under the stock option plan, Upon exercise, an option holder may either purchase vested shares
of which 152,475 shares were subject to options outstanding, and at the exercise price or elect to receive cash equal to the difference
301,875 shares were available for future grants. between the exercise price and the then fair value. The fair value of
Kaplan's common stock is determined by the Company's compensa-
Changes in options outstanding for the years ended December 28,
tion committee of the Board of Directors. In September 2003, the
2003, December 29, 2002 and December 30, 2001, were as
committee set the fair value price of Kaplan common stock at
follows:
$1,625 per share, which is determined after deducting intercom-
2003 2002 2001 pany debt from Kaplan's enterprise value. Also in September 2003,
Number Average Number Average Number Average the Company announced an offer totaling $138 million for approxi-
of Option of Option of Option mately 55 percent of the stock options outstanding at Kaplan. The
Shares Price Shares Price Shares Price
Company's offer included a 10 percent premium over the current
Beginning of yearÏÏÏÏÏ 163,900 $515.74 170,575 $490.86 166,450 $465.55 valuation price of Kaplan common stock of $1,625 per share; by
Granted ÏÏÏÏÏÏÏÏÏÏ 5,000 803.70 11,500 729.00 24,000 522.75 the end of October 2003, 100 percent of the eligible stock options
Exercised ÏÏÏÏÏÏÏÏÏ (15,675) 450.87 (16,675) 404.14 (16,875) 276.79
Forfeited ÏÏÏÏÏÏÏÏÏÏ (750) 729.00 (1,500) 561.77 (3,000) 546.04 were tendered. The Company paid out $118.7 million in the fourth
End of year ÏÏÏÏÏÏÏÏÏ 152,475 $530.81 163,900 $515.74 170,575 $490.86 quarter of 2003 and the remainder of the payouts, related to
14,463 tendered stock options, will be made at the time of their
Of the shares covered by options outstanding at the end of 2003, scheduled vesting from 2004 to 2007 if the option holder is still
111,100 are now exercisable, 26,688 will become exercisable in employed at Kaplan. Additionally, stock compensation expense will
2004, 9,562 will become exercisable in 2005, 3,875 will
2003 FORM 10-K 49