New York Times Company (NYT)

Stock Options

In December 2005, we granted Mr. Sulzberger, Jr. options to acquire 150,000 shares of Class A stock and granted Ms. Robinson options to acquire 149,000 shares of Class A stock. The exercise price was $27.445 per share, which reflects the market value of the Class A stock at the time of grant. As with stock options granted to other executive officers, the options granted to Mr. Sulzberger, Jr. and Ms. Robinson vest in equal installments over four years and expire after ten years. We estimate that the value of these options as of the date of the grant was $765,000 in the case of Mr. Sulzberger, Jr. and $759,900 in the case of Ms. Robinson. This value has been computed in the manner described in "Executive Compensation—Option Grants in Last Fiscal Year," consistent with the requirements of Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment."

Stock Options

        The Company's 1991 Executive Stock Incentive Plan ("1991 Executive Plan") provides for grants of both incentive and non-qualified stock options principally at an option price per share of 100% of the fair market value of the Company's Class A Common Stock ("Common Stock") on the date of grant. Stock options are generally granted with a 3-year vesting period and a 6-year term and a 4-year vesting period and a 10-year term. The stock options vest in equal annual installments over the respective vesting period, which is also the requisite service period.

        The Company's 2004 Non-Employee Directors' Stock Incentive Plan (the "2004 Directors' Plan") provides for grants of stock options to its Directors at an option price per share of 100% of the fair market value of Common Stock on the date of grant. Stock options with a 10-year term are granted to Directors on the date of the Annual Meeting of Stockholders and vest on the date of the subsequent Annual Meeting. The Company's Directors are considered employees under the provisions of FAS 123-R.

        Included in the Company's stock-based compensation expense in the first quarter of 2005 is the cost related to the unvested portion of the 2004 and 2001 stock option grants. The Company did not grant stock options in the first quarter of 2005. The stock options granted before 2001 and those granted in 2002 and 2003 (accelerated vesting in June 2004) were fully vested as of the beginning of 2005.

        The fair value of the 2004 stock options was estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of the 2004 options granted was estimated using the historical exercise behavior of employees. Expected volatility was based on historical volatility for a period equal to the stock option's expected life, ending on the day of grant, and calculated on a monthly basis.

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        Changes in the Company's stock options for the first quarter of 2005 were as follows:

        The weighted average remaining contractual term was 6 years for both the stock options outstanding and exercisable as of March 27, 2005. The total intrinsic value was approximately $38 million for stock options outstanding and exercisable as of March 27, 2005. The total intrinsic value for stock options exercised during the first quarter of 2005 was approximately $1 million. The weighted-average fair values for the stock options granted in 2004 were $6.64 for 6-year term stock options and $8.09 for 10-year term stock options.

        The amount of cash received from the exercise of stock options was approximately $3 million and the related tax benefit was $0.9 million in the first quarter of 2005.