Coca Cola 2008 Annual Report Download - page 112

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: STOCK COMPENSATION PLANS
Effective January 1, 2006, the Company adopted SFAS No. 123(R) using the modified prospective method.
Based on the terms of our plans, our Company did not have a cumulative effect related to its adoption. The
adoption of SFAS No. 123(R) did not have a material impact on our stock-based compensation expense for the
year ended December 31, 2006. Prior to 2006, our Company accounted for stock option plans and restricted
stock plans under the preferable fair value recognition provisions of SFAS No. 123.
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.
Our total stock-based compensation expense was approximately $266 million, $313 million and $324 million
in 2008, 2007 and 2006, respectively. These amounts were recorded in selling, general and administrative
expenses in our consolidated statements of income. The total income tax benefit recognized in the income
statement for share-based compensation arrangements was approximately $72 million, $91 million and
$93 million for 2008, 2007 and 2006, respectively. As of December 31, 2008, we had approximately $368 million
of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted
under our plans. This cost is expected to be recognized over a weighted-average period of 1.7 years as stock-
based compensation expense. This expected cost does not include the impact of any future stock-based
compensation awards.
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, through the grant of stock options, to certain officers
and employees. 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. Under
the 1999 Option Plan, a maximum of 120 million shares of our common stock was approved to be issued or
transferred, through the grant of stock options, to certain officers and employees. 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, through the grant of stock options or stock appreciation rights, to
certain officers and employees. No stock appreciation rights have been issued under the 2002 Option Plan as of
December 31, 2008. 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.
The 2008 Stock Option Plan (the ‘‘2008 Option Plan’’) was approved by shareowners in April 2008. Under
the 2008 Option Plan, a maximum of 140 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 2008 Option Plan.
Options to purchase common stock under the 2008 Option Plan have been generally granted to Company
employees at fair market value at the date of grant.
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