eTrade 2004 Annual Report Download - page 113

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Table of Contents
Index to Financial Statements
options, resulting in additional compensation expense of $46,000 in 2003. Exercise prices are generally equal to the fair market value of the
shares on the grant date. The Company granted stock options below market value to purchase 64,000 shares in 2004, 44,000 shares in 2003 and
28,000 shares in 2002. The expense recorded for the estimated fair value of the options was $0.3 million in 2004, $0.1 million in 2003 and $0.2
million in 2002. No options were granted at prices greater than market value on the date of grant in the past three years.
Beginning in 2002, the 1996 Plan has a shareholder approved automatic increase, or evergreen provision, in the number of shares
available to be issued by 5% of the number of shares of the Company’s common stock outstanding on the last trading date of December of the
immediately preceding year. At January 1, 2005, 18.5 million shares were added to the 1996 Plan pursuant to the evergreen provision, for a
total of 85.4 million shares authorized under the 1996 Plan since inception and 41.5 million shares available for grant at January 1, 2005.
The Company has also assumed option plans as a result of acquisitions in the past. No additional grants will be made under these
acquired plans.
A summary of stock option activity follows (shares in thousands):
The options available for grant, as well as the options exercisable and the associated weighted-average exercise price are shown in the
following table (shares in thousands):
104
Number of
Shares
Weighted-
Average Exercise
Price
Outstanding at December 31, 2001:
46,115
$
11.05
Granted
5,300
$
7.61
Exercised
(2,568
)
$
4.33
Canceled
(7,419
)
$
13.10
Outstanding at December 31, 2002:
41,428
$
10.66
Granted
15,702
$
5.84
Exercised
(8,543
)
$
5.36
Canceled
(4,203
)
$
11.22
Outstanding at December 31, 2003:
44,384
$
9.92
Granted
11,868
$
12.83
Exercised
(6,617
)
$
5.19
Canceled
(6,846
)
$
21.09
Outstanding at December 31, 2004:
42,789
$
9.68
Year Ended December 31,
2004
2003
2002
Options available for grant
23,037
(1)
28,943
20,465
Options exercisable
24,204
29,939
27,147
Options exercisable weighted
-
average exercise price
$
8.94
$
10.83
$
11.40
(1)
Upon registration of the evergreen provision, options available for grant will increase by approximately 18.5 million shares.