Coca Cola 2007 Annual Report Download - page 100

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: STOCK COMPENSATION PLANS (Continued)
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, 2007. 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 four years (with
approximately 25 percent of the total grant vesting each year on the anniversary of the grant date) and expire 10 years
from the date of grant. Stock options granted from 1999 through July 2003 generally became exercisable over four-
years and expire 15 years from the date of grant. Prior to 1999, stock options generally became exercisable over a
three-year vesting period and expire 10 years from the date of grant. The 1999 Stock Option Plan and the 2002 Stock
Option Plan have been amended to provide a maximum option term of 10 years for all new grants.
The fair value of each option award is estimated on the grant date using a Black-Scholes-Merton option-pricing
model that uses the assumptions noted in the following table. The expected term of the options represents the period of
time that options granted are expected to be outstanding and is derived by analyzing historic exercise behavior.
Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility
of the Company’s stock, and other factors. The risk-free interest rate for the period matching the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield is the calculated
yield on the Company’s stock at the time of the grant.
The common stock to be issued, transferred and/or sold under the stock option plans shall be made available from
authorized and unissued Company common stock or from the Company’s treasury shares. In 2007, the Company began
issuing common stock under these plans from the Company’s treasury shares.
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