Coca Cola 2005 Annual Report Download - page 103

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14: STOCK COMPENSATION PLANS (Continued)
on the date of the grant less the present value of the expected dividends not received during the performance
period.
Performance share unit Target Awards for the 2004-2006, 2005-2007 and 2006-2008 performance periods
require adjusted EPS growth in line with our Company’s internal projections over the performance periods. In
the event adjusted EPS exceeds the target projection, additional shares up to the Maximum Award may be
granted. In the event adjusted EPS falls below the target projection, a reduced number of shares as few as the
Threshold Award may be granted. If adjusted EPS falls below the Threshold Award performance level, no
shares will be granted. Of the outstanding granted performance share unit awards as of December 31, 2005,
726,379; 862,649; and 695,700 awards are for the 2004-2006, 2005-2007 and 2006-2008 performance periods,
respectively. In addition, 72,000 performance share unit awards, with predefined qualitative performance criteria
and release criteria that differ from the program described above, were granted in 2004 and were outstanding as
of December 31, 2005.
The following table summarizes information about performance share unit awards:
Number of Share Units
2005 2004 2003
Outstanding on January 1 1,583,447 798,931 —
Granted1835,440 953,196 798,931
Cancelled/Forfeited (62,159) (168,680) —
Outstanding on December 31 2,356,728 1,583,447 798,931
Threshold Award 1,352,388 950,837 399,466
Target Award 2,356,728 1,583,447 798,931
Maximum Award 3,499,092 2,339,171 1,198,397
1In 2005, 2004 and 2003, the Company granted performance share unit awards with average fair value
of $37.71 per share, $38.71 per share and $46.78 per share, respectively.
The Company recognizes compensation expense when it becomes probable that the performance criteria
specified in the plan will be achieved. The compensation expense is recognized over the remaining performance
period and is recorded in selling, general and administrative expenses. The Company has concluded that it is not
probable the performance criteria for the 2004-2006 performance period will be achieved; accordingly, no
compensation expense has been recognized for awards related to this performance period.
NOTE 15: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
Our Company sponsors and/or contributes to pension and postretirement health care and life insurance
benefit plans covering substantially all U.S. employees. We also sponsor nonqualified, unfunded defined benefit
pension plans for certain associates. In addition, our Company and its subsidiaries have various pension plans
and other forms of postretirement arrangements outside the United States. We use a measurement date of
December 31 for substantially all of our pension and postretirement benefit plans.
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