Coca Cola 2006 Annual Report Download - page 102

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: STOCK COMPENSATION PLANS (Continued)
unrecognized compensation cost related to nonvested share-based compensation arrangements granted under
our plans. This cost is expected to be recognized as stock-based compensation expense over a weighted-average
period of 1.7 years. This expected cost does not include the impact of any future stock-based compensation
awards. Additionally, our equity method investees also adopted SFAS No. 123(R) effective January 1, 2006. Our
proportionate share of the stock-based compensation expense resulting from the adoption of SFAS No. 123(R)
by our equity method investees is recognized as a reduction to equity income. The adoption of SFAS No. 123(R)
by our equity method investees did not have a material impact on our consolidated financial statements.
During 2005, the Company changed its estimated service period for retirement-eligible participants in its
plans when the terms of their stock-based compensation awards provide for accelerated vesting upon early
retirement. The full-year impact of this change in our estimated service period was approximately $50 million for
2005.
Stock Option Plans
Under our 1991 Stock Option Plan (the ‘‘1991 Option Plan’’), a maximum of 120 million shares of our
common stock was approved to be issued or transferred to certain officers and employees pursuant to stock
options granted under the 1991 Option Plan. Options to purchase common stock under the 1991 Option Plan
have been granted to Company employees at fair market value at the date of grant.
The 1999 Stock Option Plan (the ‘‘1999 Option Plan’’) was approved by shareowners in April 1999.
Following the approval of the 1999 Option Plan, no grants were made from the 1991 Option Plan, and shares
available under the 1991 Option Plan were no longer available to be granted. Under the 1999 Option Plan, a
maximum of 120 million shares of our common stock was approved to be issued or transferred to certain officers
and employees pursuant to stock options granted under the 1999 Option Plan. Options to purchase common
stock under the 1999 Option Plan have been granted to Company employees at fair market value at the date of
grant.
The 2002 Stock Option Plan (the ‘‘2002 Option Plan’’) was approved by shareowners in April 2002. An
amendment to the 2002 Option Plan which permitted the issuance of stock appreciation rights was approved by
shareowners in April 2003. Under the 2002 Option Plan, a maximum of 120 million shares of our common stock
was approved to be issued or transferred to certain officers and employees pursuant to stock options and stock
appreciation rights granted under the 2002 Option Plan. The stock appreciation rights permit the holder, upon
surrendering all or part of the related stock option, to receive common stock in an amount up to 100 percent of
the difference between the market price and the option price. No stock appreciation rights have been issued
under the 2002 Option Plan as of December 31, 2006. Options to purchase common stock under the 2002
Option Plan have been granted to Company employees at fair market value at the date of grant.
Stock options granted in December 2003 and thereafter generally become exercisable over a four-year
annual vesting period and expire 10 years from the date of grant. Stock options granted from 1999 through
July 2003 generally become exercisable over a four-year annual vesting period and expire 15 years from the date
of grant. Prior to 1999, stock options generally became exercisable over a three-year vesting period and expired
10 years from the date of grant.
The fair value of each option award is estimated on the date of the grant using a Black-Scholes-Merton
option-pricing model that uses the assumptions noted in the following table. The expected term of the options
granted represents the period of time that options granted are expected to be outstanding and is derived by
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