Corning 2007 Annual Report

17. Share-based Compensation (continued)
The following table illustrates the effect of the change from applying the original provisions of SFAS 123 to the adoption of SFAS
123(R) on 2006 net income and earnings per share (in millions, except per share amounts):
Year ended December 31, 2006
Income from continuing operations before income taxes $ 81
Net income
Earnings per Common Share – Basic:
$ 81
Net income
Earnings per Common Share – Diluted:
$ 0.05
Net income $ 0.05
The following table illustrates the effect on 2005 net income and earnings per share as if the Company had applied the fair value
recognition provisions of SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and
Disclosure.” This standard preceded SFAS 123(R) and required different measurement criteria (in millions, except per share
amounts):
Year ended December 31, 2005
Net income, as reported
Add: Stock-based employee compensation expense included in reported net income, net of related
$ 585
tax effects
Deduct: Total stock-based compensation expense determined under the fair value based method, net
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of related tax effects (68)
Net income, pro forma
Earnings per Common Share – Basic:
$ 554
As reported $ 0.40
Pro forma
Earnings per Common Share – Diluted:
$ 0.38
As reported $ 0.38
Pro forma $ 0.36
Stock Options
Our stock option plans provide non-qualified and incentive stock options to purchase authorized but unissued or treasury shares at the
market price on the grant date and generally become exercisable in installments from one to five years from the grant date. The
maximum term of non-qualified and incentive stock options is 10 years from the grant date.
The following table summarizes information concerning options outstanding including the related transactions under the options plans
for the year ended December 31, 2007:
Weighted-
Average Aggregate
Number of Weighted- Remaining Intrinsic
Shares Average Contractual Value
(in thousands) Exercise Price Term in Years (in thousands)
Options Outstanding as of December 31, 2006 95,730 $ 24.19
Granted 7,474 $ 23.57
Exercised (14,210) $ 8.27
Forfeited and Expired (984) $ 47.46
Options Outstanding as of December 31, 2007 88,010 $ 26.44 5.13 $ 685,520
Options Exercisable as of December 31, 2007 73,299 $ 27.39 4.46 $ 637,918
The aggregate intrinsic value (market value of stock less option exercise price) in the preceding table represents the total pretax
intrinsic value, based on the Company’s closing stock price on December 31, 2007, which would have been received by the option
holders had all option holders exercised their options as of that date. The total number of in-the-money options exercisable on
December 31, 2007, was approximately 48 million.
The weighted-average grant-date fair value for options granted for the years ended December 31, 2007, 2006, and 2005 was $9.65,
$9.42, and $6.18, respectively. The total fair value of options that vested during the years ended December 31, 2007, 2006, and 2005
was approximately $58 million, $74 million, and $72 million, respectively. Compensation cost related to stock options for the years
ended December 31, 2007, and 2006, was approximately $69 million and $76 million, respectively, and there was zero cost for the
year ended December 31, 2005.
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