OPTION GRANTS IN 1999

This table contains information about stock option grants we made to the named executives in 1999:

(1) We granted these nonqualified stock options on February 22, 1999 as part of our annual award program. Each option has an exercise price per share equal to the fair market value per common share on the grant date. The options also have the restoration feature described in note (2) below. Executive officers may transfer them to certain family members and entities that these family members control. Holders may exercise one-third of their options after two years, two-thirds after three years, and the full grant after four years, subject to vesting and other requirements. All outstanding stock options may also become exercisable upon death, disability, retirement or a change in control of the Company as we describe on pages 43-45.
(2) These are restoration options that we granted when participants exercised stock options that were outstanding for at least five years. The number of restoration option shares we granted equals the number of shares that the holder delivered to us as payment of the exercise price of the original option plus the number of shares withheld for tax withholding obligations. The exercise price of the restoration option is the fair market value of a Company common share on the date of its grant. The holder of a restoration option may exercise it six months after the grant date if the holder is in compliance with our stock ownership guidelines. For Mr. Golub, this date is March 7, 2000 for 111,276 of his restoration option shares and March 8, 2000 for 47,885 of these option shares. For Mr. Chenault this date is September 1, 1999. For Mr. Linen this date is February 24, 2000.
(3) These are the special stock option awards we describe on page 30. Mr. Golub’s award has our standard stock option provisions, with two differences. First, Mr. Golub will lose compensation from the award under our forfeiture policy if he joins certain competitors within six years after his employment termination instead of the standard one year period. Second, he may exercise the option only if any of these events occur:

• Mr. Golub’s employment terminates on or after April 30, 2001.
• Mr. Golub’s employment terminates prior to April 30, 2001 because of his death, disability or other employment termination (other than his voluntary resignation, voluntary retirement, substantial violation of our policies or procedures or material dishonesty).
• The Company employs Mr. Golub continuously for nine years after grant.
• The Company’s common share price is at least 50% higher than the option exercise price for 10 consecutive trading days during the option term and we continue to employ Mr. Golub for at least six years after the grant date.

Mr. Chenault’s award also has our standard stock option provisions, except that he may exercise it only if (1) we employ him continuously for nine years after grant or (2) our common share price is at least 50% higher than the option exercise price for 10 consecutive trading days during the option term and we continue to employ him for at least six years after the grant date.
(4) These numbers show hypothetical values under a variation of the Black-Scholes option pricing model. This model is a complicated mathematical formula that makes assumptions about stock option features. A number of these assumptions do not apply to the options we grant to our executive officers and other employees. In particular, the model assumes that holders can exercise stock options immediately and freely transfer them. For these reasons, we caution that the values we show in the table are theoretical and may not reflect the amounts that option holders will realize. Whether an option holder realizes value and how much this value is will depend on what our share price is relative to the exercise price. We developed the assumptions listed below and Black-Scholes values with assistance from an independent consulting firm. They are consistent with the assumptions we used to report stock option valuations in our 1999 Annual Report to Shareholders.

Assumptions for Valuing the February 1999 Grants:

• The exercise price is the same as our share price on the grant date.
• A five-year life for each option. This is the typical amount of time that passes before holders of our options exercise them.
• Expected dividend yield of 1.5%. This reflects the historical average yield for the most recent 60 months prior to the grant date.
• Expected stock price volatility of 30%. This reflects the most recent volatility for the month end stock prices of the Company’s common shares for the 60 months prior to the grant date.
• A risk-free rate of return of 5.05%. This reflects the return an investor could expect in a risk-free investment with the same grant and expiration date as our stock options. This is the yield on a zero-coupon five-year bond on the option grant date.

Assumptions for Valuing Restoration Options and Special Options:

The values shown for the restoration and special stock options are based on the same model except that the assumptions reflect:

• A six-year life for the special stock option awards and the remaining term for the restoration stock option awards.
• A risk-free rate of return ranging from 5.26% to 6.04%.

This table contains information about stock option exercises by the named executives during 1999 and unexercised options and stock appreciation rights they held at the end of 1999:

(1) We base this value on the $166.25 closing price of our common shares on the New York Stock Exchange on December 31, 1999.

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