Coca Cola 2005 Annual Report Download - page 102

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14: STOCK COMPENSATION PLANS (Continued)
Performance-Based Restricted Stock Awards
In 2001, shareowners approved an amendment to the 1989 Restricted Stock Award Plan to allow for the
grant of performance-based awards. These awards are released only upon the achievement of specific
measurable performance criteria. These awards pay dividends during the performance period. The majority of
awards have specific earnings per share targets for achievement. If the earnings per share targets are not met,
the awards will be cancelled.
The following table summarizes information about performance-based restricted stock awards:
Number of Shares
2005 2004 2003
Outstanding on January 1 713,000 2,507,720 2,655,000
Granted150,000 — 52,720
Released —(110,000) —
Cancelled/Forfeited (50,000) (1,684,720) (200,000)
Outstanding on December 31 713,0002713,00022,507,7202
1In 2005, 50,000 shares of three-year performance-based restricted stock were granted at an average
fair value of $42.40 per share. In 2003, 52,720 shares of three-year performance-based restricted stock
were granted at an average fair value of $42.91 per share.
2In 2002, the Company promised to grant an additional 50,000 shares at the end of three years and an
additional 75,000 shares at the end of four years, at an average fair value of $46.88 per share, if the
Company achieved predefined performance targets over the respective measurement periods. These
awards are similar to the performance-based restricted stock, including the payment of dividend
equivalents, but were granted in this manner because the employees were based outside of the United
States. The award to grant 50,000 shares was cancelled during 2005 because the performance target
was not met. The award to grant 75,000 shares was outstanding as of December 31, 2005.
The Company did not recognize compensation expense for the majority of these awards, as it is not
probable the performance targets will be achieved.
Performance Share Unit Awards
In 2003, the Company modified its use of performance-based awards and established a program to grant
performance share unit awards under the 1989 Restricted Stock Award Plan to executives. The number of
performance share units earned shall be determined at the end of each performance period, generally three
years, based on performance criteria determined by the Board of Directors and may result in an award of
restricted stock for U.S. participants and certain international participants at that time. The restricted stock may
be granted to other international participants shortly before the fifth anniversary of the original award.
Restrictions on such stock generally lapse on the fifth anniversary of the original award date. Generally,
performance share unit awards are subject to the performance criteria of compound annual growth in earnings
per share over the performance period, as adjusted for certain items approved by the Compensation Committee
of the Board of Directors (‘‘adjusted EPS’’). The purpose of these adjustments is to ensure a consistent year to
year comparison of the specified performance criteria. Performance share units do not pay dividends during the
performance period. Accordingly, the fair value of these units is the quoted market value of the Company stock
100