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NOTE 18.
INCENTIVE PLANS AND STOCK OPTIONS
As of March 1, 2001, the 1996 Praxair, Inc. Performance
Incentive Plan (the “1996 Plan”) was terminated, and at December
31, 2001, the 1992 Praxair Long-Term Incentive Plan (the “1992 Plan”)
expired. Stock option and other incentive compensation awards granted
by the company through December 31, 2001 were made under these plans.
Both plans provided for granting nonqualified or incentive stock options,
stock grants, performance awards, and other stock-related incentives for
key employees. The exercise price for incentive stock options was equal
to the closing price of Praxair’s common stock on the date of the
grant. Options that were granted under both plans became exercisable only
after one or more years and the option term could be no more than ten
years.
On February 28, 2001, the board of directors of the company adopted the 2002 Praxair, Inc. Long-Term Incentive Plan (the “2002 Plan”), which became effective on January 1, 2002. The shareholders approved the Plan at Praxair’s annual meeting in April 2001. Under the 2002 Plan, the number of shares available for option or stock grants is limited to a total of 15,800,000 shares. As of December 31, 2003, 9,435,170 shares were available for option or stock grants under this plan. The 2002 Plan provides for the granting of only nonqualified and incentive stock options, stock grants and performance awards and further provides that the aggregate number of shares granted as restricted stock or pursuant to performance awards may not exceed 20% of the total shares available under the Plan. The 2002 Plan also provides calendar year per-participant limits on grants of options, restricted stock and performance awards. Exercise prices for options granted under the 2002 Plan may not be less than the closing market price of the company’s common stock on the date of grant and granted options may not be repriced or exchanged without shareholder approval. Options granted under the 2002 Plan become exercisable after a minimum of one year and have a maximum duration of ten years. Both officer and non-officer employees are eligible for awards under the 2002 Plan.
The following table summarizes the changes in outstanding
shares under option and performance share equivalents for 2003, 2002,
and 2001 (options are expressed in thousands):
|
Weighted Average
|
||
| Activity |
Options
|
Exercise Price
|
 |
|
|
| Outstanding at December 31, 2000 |
29,092
|
$17.80
|
| Granted |
9,044
|
$23.53
|
| Exercised |
(6,886)
|
$13.00
|
| Cancelled or expired |
(246)
|
$22.19
|
|
|
|
| Outstanding at December 31, 2001 |
31,004
|
$20.51
|
| Granted |
2,648
|
$28.38
|
| Exercised |
(7,626)
|
$17.47
|
| Cancelled or expired |
(236)
|
$23.86
|
|
|
|
| Outstanding at December 31, 2002 |
25,790
|
$22.18
|
| Granted |
3,967
|
$26.46
|
| Exercised |
(7,052)
|
$20.16
|
| Cancelled or expired |
(251)
|
$26.08
|
|
|
|
| Outstanding at December 31, 2003 |
22,454
|
$23.52
|
 |
|
|
| Exercisable at | ||
| December
31, 2001 |
16,104
|
$18.56
|
| December
31, 2002 |
17,240
|
$20.78
|
| December
31, 2003 |
13,985
|
$22.10
|
|
|
|
The following table summarizes information about
options outstanding and exercisable at December 31, 2003 (options are
expressed in thousands, averages are calculated on a weighted basis, life
in years):
|
Outstanding
|
|
Exercisable
|
||||
|
|
|
|
|
|
|
|
Average
|
Number
|
Average
|
Number
|
Average
|
||
| Range of |
Remaining
|
of
|
Exercise
|
of
|
Exercise
|
|
| Exercise Prices |
Life
|
Options
|
Price
|
Options
|
Price
|
|
|
|
|
|
|
|
|
| $8.94 $15.85 |
1.3
|
498
|
$10.75
|
497
|
$10.75
|
|
| $16.66 $19.97 |
5.2
|
3,082
|
$18.33
|
3,082
|
$18.33
|
|
| $20.28 $24.97 |
5.9
|
9,747
|
$22.29
|
7,651
|
$22.35
|
|
| $25.09 $30.01 |
8.3
|
9,127
|
$27.29
|
2,755
|
$27.69
|
|
|
|
|
|
|
|
|
| $8.94 $30.01 |
6.7
|
22,454
|
$23.52
|
13,985
|
$22.10
|
|
|
|
|
|
|
|
|
