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Show GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS-(Continued) Unfunded liabilities of the Pension Plan are being amortized over a 20-year period and were estimated to be $581 million ($447 million unfunded vested) and $589 million ($455 million unfunded vested) at December 31, 1975 and June 30, 1976, respectively, based on the book value of Trust assets. It is estimated that amendments to the Pension Plan effective July 1, 1976 will increase unfunded liabilities approximately $ 150 million. Effective July 1, 1973, a Supplementary Pension Plan was approved by the Company's Board of Directors, the purpose of which is to ensure that the pension benefits of long-service professional and managerial employees, when combined with their social security benefits, bear a reasonable relationship to their final average earnings. If a specified percentage of final average earnings multiplied by years of credited service is greater than the sum of an employee's pension under the Pension Plan and his estimated Social Security Benefit, the Company will pay a supplementary pension equal to 90% of the difference. Costs of the Supplementary Pension Plan for the partial year 1973 were $2.0 million and costs for the years 1974 and 1975 were $4.2 million and $4.3 million, respectively. Costs for the first six months of 1975 and 1976 were $2.2 million and $5.2 million, respectively. Unamortized liabilities for the Supplementary Pension Plan were estimated to be $31 million at December 31, 1975 and $84 million at June 30, 1976, after taking account of amendments which were effective January 1, 1976. 12. Stock Options and Incentive Compensation Under the General Electric stock option plans, adopted in 1963, 1968 and 1973 (each effective for a period of five years) stock options to purchase General Electric common stock have been granted to officers and other key employees. The options are granted on the following terms: (i) the option price is fixed at 100% of the fair market value of the stock on the date the option is granted, (ii) shares subject to each option become exercisable in approximately equal installments over a period of not less than one nor more than nine years from the grant thereof, such installments to mature annually except that the initial and/or terminal installment may mature in less than one year from the date of grant or of the last previous installment, (iii) each installment is earned out only if the optionee remains in the employ of the Company or its affiliates, (iv) the rights of the optionee to purchase shares of any matured installment may be exercised either in whole or in part at any time prior to the expiration of the option, which is normally ten years from the date of grant, (v) stock options are not transferable except in limited circumstances upon the death of the optionee, (vi) upon termination of employment options are exercisable for three months (longer in case of death), (vii) the optionee has no rights of a share owner with respect to the shares subject to the options until the option price is fully paid and the shares are issued, and (viii) adjustments may be made in the number of shares authorized by the Plans subject to outstanding options and the price per share in the case of changes in the capital structure of the Company. The 1973 Plan, unlike the previous Plans, permits the granting of stock appreciation rights. Such rights may be granted in connection with those portions of options granted under the previous Plans which had not become exercisable on the date of the adoption of the 1973 Plan as well as in connection with stock option grants under the 1973 Plan. Such rights permit an optionee, in lieu of exercising all or a portion of a matured option, to receive in cash or General Electric common stock (the committee of the Board of Directors administering the Plan has determined that distributions will be made in General Electric common stock), an amount equal to the excess of the market price of the common stock on the date the right is exercised over the option price. Such payment is charged to operating costs. The extent to which such rights will be granted in connection with the grant of stock options is solely at the discretion of the Committee. Stock appreciation rights terminate and may no longer be exercised upon the termination of the related option right or upon the earlier death of the grantee of the stock appreciation right. Appreciation rights relating to unexpired options for 1,020,791 shares and 971,201 shares were outstanding at December 31, 1975 and June 30, 1976, respectively. F-14 GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS(Continued) The status of shares subject to options granted and related appreciation rights under the aforementioned Plans is shown in the following tabulation. Market value below is based on the reported closing price of the stock on the New York Stock Exchange. Shares under Option (1) Year of Grant Number of Shares December 31, 1975 June 30, 1976 Average Option Price Per Share Aggregate Value at Date of Grant December 31, 1975 June 30, 1976 Stock Appreciation Rights Related to Shares Under Option at December 31, 1975 June 30, 1976 (in millions) (Number of shares) 1966............... 108,710 92,635 $48.75 $ 5.3 $ 4.5 19,374 14,738 1968....204,730 99,659 50.75 5.8 5.1 23,690 20,392 1968.... 204,730 195,656 47.88 9.8 9.4 48,192 45,478 1969............... 209,329 192,343 40.44 8.5 7.8 49,526 48,374 1970............... 460,897 407,957 43.13 19.9 17.6 151,173 131,593 1971.........192,271 180,183 56.50 10.9 10.2 40,310 37,449 1972............... 394,544 377,440 67.63 26.7 25.5 160,164 157,972 1973............... 505,633 467,338 64.75 32.7 30.3 207,023 187,449 1974.......700,496 666,618 39.39 27.5 26.3 265,684 249,444 1975.......167,062 166,734 47.81 8.0 8.0 55,655 56,088 1976............... 108,550 52.19 5.7 22,224 3,058,217 2,955,113 $155.1 $150.4 1,020,791 971,201 (2) Shares for which options first became exercisable and option price and market value at dates options became exercisable during the last five years: _ Option Price Market value Year ended Number of shares Average per share Aggregate (in millions) Average per share Aggregate (in millions) December 31, 1971............................................ 264,520 $44.17 $11.7 $56.94 $15.1 1972............................................ 265,468 45.63 12.1 66.95 17.8 1973............................................ 272,985 50.82 13.9 63.77 17.4 1974............................................ 317,609 54.00 17.2 35.53 11 3 1975............................................ 356,709 50.78 18.1 48.61 17.3 Six months ended June 30, 1976....... 107,149 47.96 5.1 48.76 5.2 (3) Shares for which options were exercised and option price and market value at dates options were exercised during the last five years: Option Price Market value Year ended Number of shares Average per share Aggregate (in millions) Average per share Aggregate (in millions) December 31, 1971............................................ 238,592 $40.29 $ 9.6 $58.26 $13.9 1972............................................ 297,244 42.71 12.7 65.79 19.6 1973............................................ 273,569 42.84 11.7 63.69 17.4 1974............................................ 48,689 44.55 2.2 53.49 2.6 1975............................................ 35,378 41.81 1.5 46.94 1.7 Six months ended June 30, 1976....... 78,375 44.51 3.5 53.69 4.2 In 1975 there were 795 shares subject to options surrendered on exercise of appreciation rights. In the first six months of 1976 there were 5,571 shares surrendered. The number of shares available for granting options at the end of 1975 was 1,123,897 (1,081,382 at June 30, 1976). The number of shares and per share amounts in the preceding tables have been adjusted to reflect the two-for-one stock split in April 1971. F-15 ? |