MWV » Topics » Stock Options

These excerpts taken from the MWV 10-K filed Feb 24, 2009.

Stock Options

Section 6.1 Grants of Options. On each Annual Meeting Date before January 1, 2004, Options to purchase 1,500 shares of Common Stock shall automatically be granted to each individual who, at the adjournment of the stockholders’ meeting occurring, is an Eligible Director. All Options shall be evidenced by written agreements and shall be granted on the terms hereafter set forth, together with such other terms, not inconsistent with the terms of the Plan, as the Board or the Compensation Committee, in its discretion, may from time to time approve. Effective January 1, 2004, the automatic grant of options under this Section is suspended pending further action by the Board.

Section 6.2 Option Price. The per-share exercise price for each Option shall be 100% of the Fair Market Value of a share of Common Stock on the date the Option is granted.

Section 6.3 Medium and Time of Payment. Stock purchased pursuant to an Option shall be paid for in full at the time of purchase in such manner as the Administration Committee or the Compensation Committee shall determine. The medium of payment shall be cash, Common Stock valued at Fair Market Value, or any other property satisfactory to the Company, valued as of the Effective Date of the exercise; provided, that any such Common Stock shall have been either purchased by the Eligible Director on the open market or held for more than six months. In addition, if the Compensation Committee so provides, payment may be made through a broker cashless exercise program. Following receipt of payment, the Company shall deliver to the Optionee a certificate or certificates for such shares due upon exercise of an Option.

Section 6.4 Period of Exercise of Options. Each Option shall be vested and exercisable from and after the date on which it is granted. Unless the Compensation Committee provides otherwise in connection with the grant of an Option, the Option shall remain exercisable as follows. Generally, the Option shall expire on the tenth anniversary of the date of grant. However, if the Eligible Director to whom it is granted has a Termination of Board Membership for any reason, each of his or her then-outstanding Options shall expire on earlier of the fifth anniversary of the date of such Termination of Board Membership or the tenth anniversary of the date of grant; provided that the exercise period for any Option shall not be extended past the expiration date set forth in the Option agreement. All of the periods within which Options are exercisable are subject always to such further limitations as may be required to maintain favorable treatment under the securities and tax laws.

 

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Section 6.5 Rights as a Stockholder. An Optionee shall have no rights as a stockholder with respect to any shares issuable or transferable upon exercise thereof until the date of issuance of a stock certificate for such shares. Except as provided in Section 7.2 of the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date as of which such stock certificate is issued.

Section 6.6 Non-Assignability. No Option shall be assignable or transferable except by will or by the laws of descent and distribution, by operation of law, or, if permitted by law and under uniform standards adopted by the Compensation Committee, to immediate family members of the Optionee, or to trusts whose beneficiaries are the Optionee or immediate family members.

Stock Options

SIZE="2">Section 6.1 Grants of Options. On each Annual Meeting Date before January 1, 2004, Options to purchase 1,500 shares of Common Stock shall automatically be granted to each individual who, at the adjournment of the
stockholders’ meeting occurring, is an Eligible Director. All Options shall be evidenced by written agreements and shall be granted on the terms hereafter set forth, together with such other terms, not inconsistent with the terms of the Plan,
as the Board or the Compensation Committee, in its discretion, may from time to time approve. Effective January 1, 2004, the automatic grant of options under this Section is suspended pending further action by the Board.

STYLE="margin-top:12px;margin-bottom:0px">Section 6.2 Option Price. The per-share exercise price for each Option shall be 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted.

Section 6.3 Medium and Time of Payment. Stock purchased pursuant to an Option shall be paid for in full at the time of
purchase in such manner as the Administration Committee or the Compensation Committee shall determine. The medium of payment shall be cash, Common Stock valued at Fair Market Value, or any other property satisfactory to the Company, valued as of the
Effective Date of the exercise; provided, that any such Common Stock shall have been either purchased by the Eligible Director on the open market or held for more than six months. In addition, if the Compensation Committee so provides,
payment may be made through a broker cashless exercise program. Following receipt of payment, the Company shall deliver to the Optionee a certificate or certificates for such shares due upon exercise of an Option.

STYLE="margin-top:12px;margin-bottom:0px">Section 6.4 Period of Exercise of Options. Each Option shall be vested and exercisable from and after the date on which it is granted. Unless the
Compensation Committee provides otherwise in connection with the grant of an Option, the Option shall remain exercisable as follows. Generally, the Option shall expire on the tenth anniversary of the date of grant. However, if the Eligible Director
to whom it is granted has a Termination of Board Membership for any reason, each of his or her then-outstanding Options shall expire on earlier of the fifth anniversary of the date of such Termination of Board Membership or the tenth anniversary of
the date of grant; provided that the exercise period for any Option shall not be extended past the expiration date set forth in the Option agreement. All of the periods within which Options are exercisable are subject always to such further
limitations as may be required to maintain favorable treatment under the securities and tax laws.

 


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Section 6.5 Rights as a Stockholder. An Optionee shall have no rights as a stockholder with respect to any
shares issuable or transferable upon exercise thereof until the date of issuance of a stock certificate for such shares. Except as provided in Section 7.2 of the Plan, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date as of which such stock certificate is issued.

Section 6.6 Non-Assignability. No Option shall be assignable or
transferable except by will or by the laws of descent and distribution, by operation of law, or, if permitted by law and under uniform standards adopted by the Compensation Committee, to immediate family members of the Optionee, or to trusts whose
beneficiaries are the Optionee or immediate family members.

This excerpt taken from the MWV 10-Q filed Nov 7, 2005.

Stock Options

 

The company measures compensation cost for stock options issued to employees and directors using the intrinsic value-based method of accounting in accordance with Accounting Principles Board Opinion (APB) No. 25. The company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, as amended, in accounting for its plans. In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net income (loss) and net income (loss) per share would have changed to the unaudited pro forma amounts as follows:

 

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Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

In millions, except per share data

 

   Third Quarter Ended
September 30


    Three Quarters Ended
September 30


 
   2005

    2004

    2005

    2004

 

Net income (loss) –

                                

As reported

   $ 55     $ 105     $ (34 )   $ 150  

Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effect

     2       1       4       1  

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     (3 )     (3 )     (9 )     (6 )
    


 


 


 


Pro forma net income (loss)

   $ 54     $ 103     $ (39 )   $ 145  
    


 


 


 


Income (loss) per share - basic and diluted

                                

As reported

   $ 0.30     $ 0.52     $ (0.18 )   $ 0.74  

Pro forma

     0.29       0.51       (0.21 )     0.71  

 

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123-revised (SFAS 123R), Share-Based Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of operations. The accounting provisions of SFAS 123R are effective for annual reporting periods beginning after June 15, 2005. The company is in the process of analyzing the impact of SFAS 123R on the company’s consolidated financial statements for 2006.

 

This excerpt taken from the MWV 10-Q filed Aug 4, 2005.

Stock Options

 

The company measures compensation cost for stock options issued to employees and directors using the intrinsic value-based method of accounting in accordance with Accounting Principles Board Opinion (APB) No. 25. The company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, as amended, in accounting for its plans. In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

4


Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net income (loss) and net income (loss) per share would have changed to the unaudited pro forma amounts as follows:

 

In millions, except per share data

 

   Second Quarter Ended
June 30


   First Half Ended
June 30


   2005

    2004

   2005

    2004

Net income (loss) –

                             

As reported

   $ (83 )   $ 47    $ (89 )   $ 45

Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effect

     1       —        2       —  

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     3       1      6       3
    


 

  


 

Pro forma net income (loss)

   $ (85 )   $ 46    $ (93 )   $ 42
    


 

  


 

Income (loss) per share - basic and diluted

                             

As reported

   $ (0.41 )   $ 0.23    $ (0.44 )   $ 0.22

Pro forma

     (0.42 )     0.23      (0.46 )     0.21

 

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123-revised (SFAS 123R), Share-Based Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of operations. The accounting provisions of SFAS 123R are effective for annual reporting periods beginning after June 15, 2005. The company is in the process of analyzing the impact of SFAS 123R on the consolidated financial statements for 2006.

 

This excerpt taken from the MWV 10-Q filed May 5, 2005.

Stock Options

 

The company measures compensation cost for stock options issued to employees and directors using the intrinsic value-based method of accounting in accordance with Accounting Principles Board Opinion (APB) No. 25. The company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, as amended, in accounting for its plans. In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

4


Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[Unaudited]

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net income (loss) and net income (loss) per share would have changed to the unaudited pro forma amounts as follows:

 

In millions, except per share data

 

   First Quarter Ended
March 31


 
   2005

    2004

 

Net loss –

                

As reported

   $ (6 )   $ (2 )

Add: Stock-based employee compensation expense included in reported net loss, net of related tax effect

     1       —    

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     3       2  
    


 


Pro forma net loss

   $ (8 )   $ (4 )
    


 


Loss per share - basic and diluted

                

As reported

   $ (0.03 )   $ (0.01 )

Pro forma

     (0.04 )     (0.02 )

 

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123-revised 2004 (SFAS 123R), Share-Based Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of operations. The accounting provisions of SFAS 123R are effective for annual reporting periods beginning after June 15, 2005. The company is in the process of analyzing the impact of SFAS 123R on results of operations for 2006.

 

This excerpt taken from the MWV 10-Q filed Mar 14, 2005.

Stock Options

 

In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

4


Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[Restated and Unaudited]

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net income (loss) and income (loss) per share would have been reduced to the unaudited pro forma amounts as follows:

 

In millions, except per share data

 

   Second Quarter Ended

    First Half Ended

 
     2004

  

June 30

2003


    2004

  

June 30

2003


 
     Restated    Restated     Restated    Restated  

Net income (loss)

                              

As reported

   $ 47    $ (6 )   $ 45    $ (81 )

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     1      2       3      3  
    

  


 

  


Pro forma net income (loss)

   $ 46    $ (8 )   $ 42    $ (84 )
    

  


 

  


Income (loss) per share - basic and diluted

                              

As reported

   $ 0.23    $ (0.03 )   $ 0.22    $ (0.41 )

Pro forma

   $ 0.23    $ (0.04 )   $ 0.21    $ (0.42 )

 

This excerpt taken from the MWV 10-Q filed Mar 14, 2005.

Stock Options

 

In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

4


Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[Restated and Unaudited]

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net loss and net loss per share would have been reduced to the unaudited pro forma amounts as follows:

 

     First Quarter Ended March 31

 
In millions, except per share data    2004

    2003

 
     Restated     Restated  

Net loss

                

As reported

   $ (2 )   $ (75 )

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     2       1  
    


 


Pro forma net loss

   $ (4 )   $ (76 )
    


 


Loss per share - basic and diluted

                

As reported

   $ (0.01 )   $ (0.38 )

Pro forma

     (0.02 )     (0.38 )

 

This excerpt taken from the MWV 10-Q filed Mar 14, 2005.

Stock Options

 

In January 2003, the company adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation. The company continues to apply the intrinsic value-based method to account for stock options.

 

4


Table of Contents

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[Restated and Unaudited]

 

If compensation cost for the company’s stock options had been determined based on the fair value method of SFAS No. 123, the company’s net income (loss) and income (loss) per share would have been reduced to the unaudited pro forma amounts as follows:

 

In millions, except per share data    Third Quarter Ended
September 30


   Three Quarters Ended
September 30


 
     2004

   2003

   2004

   2003

 
               Restated    Restated  

Net income (loss)
As reported, as previously reported

   $ 105    $ 27    $ 150    $ (54 )

Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effect

     1      —        1      —    

Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effect

     3      1      6      4  
    

  

  

  


Pro forma net income (loss)

   $ 103    $ 26    $ 145    $ (58 )
    

  

  

  


Income (loss) per share - basic and diluted

                             

As reported

   $ 0.52    $ 0.14    $ 0.74    $ (0.27 )

Pro forma

   $ 0.51    $ 0.13    $ 0.71    $ (0.29 )

 

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