Verizon Communications (VZ)

Stock Options

The Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon common stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004.

The following table summarizes Verizon’s stock option activity:

Total stock options outstanding at December 31, 2009 and 2008 were exercisable. The number of stock options exercisable at December 31, 2007 was 174,838.

The following table summarizes information about Verizon’s stock options outstanding as of December 31, 2009:

The total intrinsic value for stock options outstanding was not significant as of December 31, 2009 and December 31, 2008. The total intrinsic value for stock options exercised was $147 million in 2007 and not significant in 2009 and 2008. The amount of cash received from the exercise of stock options and the related tax benefits was not significant in 2009 and 2008 and was $1,274 million in 2007. The after-tax compensation expense for stock options was not significant for 2009, 2008 and 2007.

We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory, and include a limit on the Company’s share of cost for certain recent and future retirees. We also sponsor defined contribution savings plans to provide opportunities for eligible employees to save for retirement on a tax-deferred basis. We use a measurement date of December 31 for our pension and postretirement health care and life insurance plans.

Stock Options

The Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004; all stock options outstanding are vested and exercisable.

The following table summarizes our stock option activity:

The weighted-average remaining contractual term was approximately two years for stock options outstanding as of March 31, 2009. The total intrinsic value for stock options outstanding and exercised was not material as of March 31, 2009 and March 31, 2008.

We maintain noncontributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for certain of our retirees and their dependents, which are both contributory and non-contributory and include a limit on the company’s share of cost for certain recent and future retirees.

Article 6. Stock Options

6.1 Grant of Options.    Subject to the terms of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee.

6.2 Option Price.    The Option Price under each Option will not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. The Committee may not reprice a previously granted Option.

6.3 Term of Options.    Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided that no Option shall be exercisable after the tenth (10th) anniversary of its date of grant.

6.4 Exercise of Options.    Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. Options shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

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6.5 Payment.    When an Option is exercised, the Option Price shall be payable to the Company in full either:

The Committee also may allow broker-assisted exercise as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means that the Committee determines to be consistent with the Plan’s purpose and applicable law.

Subject to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment of the Option Price, the Company shall deliver to the Participant, in the Participant’s name (or, at the direction of the Participant, jointly in the names of the Participant and the Participant’s spouse), one or more Share certificates for the Shares purchased under the Option(s).

6.6 Limitations on ISOs.    Notwithstanding anything in the Plan to the contrary, to the extent required from time to time by the Code and/or applicable regulations, the following additional provisions shall apply to the grant of Options that are intended to qualify as ISOs:

Stock Options

The Verizon Long-Term Incentive Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004; all stock options outstanding are vested and exercisable.

The following table summarizes our stock option activity:

The weighted-average remaining contractual term was approximately two years for stock options outstanding as of September 30, 2008.

The total intrinsic value for stock options outstanding and exercisable was not material as of September 30, 2008. The total intrinsic value was approximately $303 million for stock options outstanding and exercisable as of September 30, 2007.

The total intrinsic value for stock options exercised was not material for the three and nine months ended September 30, 2008. The total intrinsic value for stock options exercised during the three and nine months ended September 30, 2007 was $34 million and $99 million, respectively.

The amount of cash received and the related tax benefits from the exercise of stock options were not material for the three and nine months ended September 30, 2008. For the three and nine months ended September 30, 2007, the amount of cash received from the exercise of stock options was approximately $243 million and $795 million, respectively, and the related tax benefits were not material.

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We maintain noncontributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for certain of our retirees and their dependents, which are both contributory and non-contributory and include a limit on the company’s share of cost for certain recent and future retirees.

Stock Options

The Verizon Long-Term Incentive Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004; all stock options outstanding are vested and exercisable.

The following table summarizes our stock option activity:

The weighted-average remaining contractual term was approximately three years for stock options outstanding as of June 30, 2008.

The total intrinsic value for stock options outstanding and exercisable was not material as of June 30, 2008. The total intrinsic value was approximately $140 million for stock options outstanding and exercisable as of June 30, 2007.

The total intrinsic value for stock options exercised was not material for the three and six months ended June 30, 2008. The total intrinsic value for stock options exercised during the three and six months ended June 30, 2007 was $57 million and $65 million, respectively.

The amount of cash received and the related tax benefits from the exercise of stock options were not material for the three and six months ended June 30, 2008. For the three and six months ended June 30, 2007, the amount of cash received from the exercise of stock options was approximately $439 million and $552 million, respectively, and the related tax benefits were approximately $14 million and $14 million, respectively.

The after-tax compensation expense for stock options was not material for the three and six months ended June 30, 2007.

We maintain noncontributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory and include a limit on the company’s share of cost for certain recent and future retirees.

Stock Options

The Verizon Long-Term Incentive Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004; all stock options outstanding are vested and exercisable.

The following table summarizes our stock option activity:

The weighted-average remaining contractual term was approximately three years for stock options outstanding as of March 31, 2008.

The total intrinsic value for stock options outstanding and exercised as of March 31, 2008 and 2007 was not material.

The amount of cash received from the exercise of stock options during the three months ended March 31, 2008 was not material and during the three months ended March 31, 2007 was $113 million. The related tax benefits were not material.

The after-tax compensation expense for stock options was not material for the three months ended March 31, 2007.

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We maintain noncontributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory and include a limit on the company’s share of cost for certain recent and future retirees.

Stock Options

The Verizon Long Term Incentive Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon Stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004.

The following table summarizes Verizon’s stock option activity:

The following table summarizes information about Verizon’s stock options outstanding as of December 31, 2007:

The total intrinsic value was approximately $223 million for stock options outstanding as of December 31, 2007. The total intrinsic value for stock options exercised was $147 million, $10 million and $6 million, during 2007, 2006 and 2005, respectively.

The amount of cash received from the exercise of stock options was approximately $1,274 million, $101 million and $34 million for 2007, 2006 and 2005, respectively. The related tax benefits were not material.

The after-tax compensation expense for stock options was not material in 2007, and was $28 million and $53 million for 2006 and 2005, respectively.

We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory and include a limit on the Company’s share of cost for certain recent and future retirees. We also sponsor defined contribution savings plans to provide opportunities for eligible employees to save for retirement on a tax-deferred basis. We use a measurement date of December 31 for our pension and postretirement health care and life insurance plans.

Refer to Note 1 for a discussion of the adoption of SFAS No. 158, which was effective December 31, 2006.

Stock Options

The Verizon Long Term Incentive Plan provides for grants of stock options to employees at an option price per share of 100% of the fair market value of Verizon stock on the date of grant. Each grant has a 10 year life, vesting equally over a three year period, starting at the date of the grant. We have not granted new stock options since 2004. We determined stock-option related employee compensation expense for the 2004 grant using the Black-Scholes option-pricing model. Substantially all stock options were fully vested during the first quarter of 2007.

The following table summarizes Verizon’s stock option activity:

The weighted-average remaining contractual term was three years for stock options outstanding and exercisable as of September 30, 2007. The total intrinsic value was approximately $303 million for stock options outstanding and exercisable as of September 30, 2007. The total intrinsic value for stock options exercised during the three and nine months ended September 30, 2007 was $34 million and $99 million, respectively. The total intrinsic value for stock options exercised during the three and nine months ended September 30, 2006 was not material.

For the three and nine months ended September 30, 2007, the amount of cash received from the exercise of stock options was approximately $243 million and $795 million, respectively, and the related tax benefits were not material. For the three and nine months ended September 30, 2006, the amount of cash received from the exercise of stock options was approximately $46 million and $53 million, respectively, and the related tax benefits were not material.

For the three and nine months ended September 30, 2007 and 2006, after-tax compensation expense for stock options was not material.

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We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory and include a limit on the Company’s share of cost for certain recent and future retirees.