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## DEFERRED COMPENSATION OBLIGATION 

Key maintains various deferred compensation plans, under which employees and directors can defer a portion of their compensation for future distribution. All or a portion of such deferrals will be distributed in the form of KeyCorp common shares. Effective December 31, 2002, Key reclassified its $68 million obligation relating to the portion of deferred compensation payable in KeyCorp common shares from “other liabilities” to “capital surplus” in accordance with EITF 97-14, 

Key’s compensation plans allow for the granting of stock options, stock appreciation rights, limited stock appreciation rights, restricted stock, performance shares, discounted stock purchases and certain deferred compensation related awards to eligible employees and directors. Under all of the option plans, exercise prices cannot be less than the fair value of Key’s common stock on the grant date. Generally, options become exercisable at the rate of 33% per year beginning 

## 15. STOCK OPTIONS 

“Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.” Among other things, EITF 97-14, which became effective March 19, 1998, for deferrals after that date, requires that the deferred compensation obligation to be settled by the delivery of shares be classified in equity without any subsequent expense recognition for changes in the market value of the underlying shares. Key did not reclassify its obligation in years prior to 2002, because it was not material. 

one year from their grant date and expire no later than 10 years from their grant date. 

At December 31, 2003, KeyCorp had 2,828,605 common shares available for future grant, compared with 1,680,959 at December 31, 2002. 

The following table summarizes activity, pricing and other information about Key’s stock options. 

<img src='content_image/119991.jpg'>

The following table summarizes the range of exercise prices and other related information pertaining to Key’s stock options at December 31, 2003. 

<img src='content_image/119993.jpg'>

Information pertaining to Key’s method of accounting for employee stock options, including pro forma disclosures of the net income and earnings per share effect of stock options using the “fair value method,” is 

included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Stock-Based Compensation” on page 54. 

