CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company has stock option plans for which it is authorized to grant options to purchase up to 9.0 million shares of the Company’s common stock, of which 1.9 million shares remain available for grant as of December 31, 2001. Stock options may be granted to officers, key employees and non-employee directors with an exercise price not less than the fair market value of the common stock on the date of grant.

A summary of the option activity under the stock option plans is as follows as of December 31, 2001, 2000 and 1999:

The following table summarizes information about stock options outstanding at December 31, 2001:

SFAS No. 123 “Accounting for Stock-Based Compensation,” requires companies to provide additional note disclosures about employee stock-based compensation plans based on a fair value method of accounting. As permitted by this accounting standard, the Company continues to account for these plans under APB Opinion 25.