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## Notes to Consolidated Financial Statements (Continued) 33333333333333333333333333333333333333333333 

stock, (2) diversify the savings and investment plans’ assets away from the Company’s stock, (3) monitor investment alternatives to the Company’s stock, and (4) avoid conflicts of interest. 

Although the Company believes that it and the other defendants have meritorious defenses to each and all of the aforementioned class action and derivative complaints and intends to contest each lawsuit vigorously, an adverse resolution of any of the lawsuits could have a material adverse effect on the Company’s financial position and results of operations. The Company is not presently able to reasonably estimate potential losses, if any, related to any of the lawsuits. 

In addition, various claims and legal proceedings generally inci- dental to the normal course of business are pending or threatened against the Company. While the ultimate liability from these pro- ceedings is presently indeterminable, any additional liability is not expected to have a material adverse effect on the Company’s finan- cial position or results of operations. 

## 333 NOTE N: EMPLOYEE STOCK PLANS 

The 2001 Stock Plan and 1995 Stock Option Plan provide for the grant of both incentive and nonqualified stock options at an exer- cise price which is not less than 100 percent of the fair value on the date of grant. The 1991 Stock Plan provided for the grant of incentive stock options at an exercise price which is 100 percent of the fair value on the date of grant and nonqualified stock options at an exercise price which may be less than the fair value on the date of grant. The 1976 Stock Option Plan provided for the grant of both incentive and nonqualified stock options at an exer- cise price which is 100 percent of the fair value on the date of grant. No further grants are allowed under the 1991 Stock Plan and 1976 Stock Option Plan. All of these plans were approved by the Company’s stockholders. 

The plans also provide that all stock options may generally be exercised in their entirety from 1 to 6 years after the date of grant. Incentive stock options terminate 10 years from the date of grant, and those stock options granted after December 31, 1986 become exercisable to a maximum of $100,000 per year. Non- qualified stock options terminate 11 years from the date of grant, 10 years and a day if issued in connection with the 1995 Stock Option Plan, or as determined by the Management Development and Compensation Committee of the Board of Directors (MDCC) if issued under the 2001 Stock Plan. 

The 2001 Stock Plan and 1991 Stock Plan also provide for the award of restricted stock and restricted units. The 2001 Stock Plan also provides for the award of stock appreciation rights. The 1997 Nonemployee Directors Restricted Stock Plan provides for the award of restricted stock to nonemployee directors. Restricted 

stock, restricted unit, and stock appreciation rights awards are determined by the MDCC and are compensatory in nature. Restricted stock, restricted units, and stock appreciation rights vest over a specified period of time as determined by the MDCC. Restricted stock awards entitle the participant to full dividend and voting rights. Unvested shares are restricted as to disposition and subject to forfeiture under certain circumstances. Compensation expense is recognized over the vesting period. 

No further grants are allowed under the 2001 Stock Plan, 1997 Nonemployee Directors Restricted Stock Plan, and 1995 Stock Option Plan after January 31, 2011, November 25, 2006, and March 21, 2005, respectively. 

Awards of 314,800; 201,800; and 207,100 shares of restricted stock and restricted units were made to employees and directors at a weighted-average fair value at the grant date of $30.02, $32.62, and $28.13 in 2003, 2002, and 2001, respec- tively. The required conditions for 200,100; 428,600; and 304,600 shares of restricted stock and restricted units were satis- fied during 2003, 2002, and 2001, respectively. There were 13,000; 183,500; and 715,800 shares of restricted stock and restricted units forfeited during 2003, 2002, and 2001, respec- tively. There were 940,600; 837,600; and 1,249,300 shares of restricted stock and restricted units outstanding at December 31, 2003, 2002, and 2001, respectively. The amount of compensation expense recorded was $8 million, $7 million, and $12 million in 2003, 2002, and 2001, respectively. The balance of unearned compensation was $13 million and $12 million at December 31, 2003 and 2002, respectively. 

There were 53.2 million, 59.2 million, and 70.6 million addi- tional shares of common stock (including shares held in treasury) authorized for stock options and restricted stock awards at December 31, 2003, 2002, and 2001, respectively. 

Stock option information for 2003, 2002, and 2001 follows: 

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