Coca Cola 2006 Annual Report Download - page 107

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: STOCK COMPENSATION PLANS (Continued)
The following table summarizes information about performance-based restricted stock awards:
2006 2005 2004
Weighted- Weighted- Weighted-
Average Average Average
Grant-Date Grant-Date Grant-Date
Shares Fair Value Shares Fair Value Shares Fair Value
Nonvested on January 1 713,000 $ 47.37 713,000 $ 47.75 2,507,720 $ 47.93
Granted 224,000 43.66 50,000 42.40 — —
PSU conversion1123,852 42.07 —— ——
Vested and released2(50,000) 56.25 — — (110,000) 50.54
Cancelled/Forfeited (594,000) 47.18 (50,000) 47.88 (1,684,720) 47.84
Nonvested on December 31 416,852 $ 43.00 713,000 $ 47.37 713,000 $ 47.75
1Represents issuance of restricted stock to executives from conversion of previously granted
performance share units due to their retirement during the year. The weighted-average grant-date
fair value is based on the fair values of the performance share unit awards’ grant-date fair values.
2The total fair value of performance-based restricted shares vested and released during the years
ended December 31, 2006 and 2004, was approximately $2.1 million and $5.0 million, respectively.
The grant-date fair value is the quoted market value of the Company stock on the respective grant
date.
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
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. Performance share unit awards provide for cash equivalent payments to former executives
who become ineligible for restricted stock grants due to certain events such as death, disability or termination.
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