Coca Cola 2008 Annual Report Download - page 117

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:
2008 2007 2006
Weighted- Weighted- Weighted-
Average Average Average
Grant-Date Grant-Date Grant-Date
Shares Fair Value Shares Fair Value Shares Fair Value
Nonvested on January 1 286,800 $ 45.67 293,000 $ 43.40 788,000 $ 47.32
Granted ——28,100 53.43 224,000 43.66
Promises to grant 11,209 57.99 15,700 63.77 — —
Vested and released1——— — (50,000) 56.25
Cancelled/forfeited ——(50,000) 42.40 (669,000) 47.15
Nonvested on December 31 298,0092$ 46.13 286,8002$ 45.67 293,000 $ 43.40
1The total fair value of performance-based restricted shares vested and released during the year ended
December 31, 2006, was approximately $2.1 million. The grant-date fair value is the quoted market
value of the Company stock on the respective grant date.
2The nonvested shares on December 31, 2008 and 2007 include promises to grant performance-based
restricted stock of 26,909 and 15,700, respectively. These awards are similar to performance-based
restricted stock, including the payment of dividend equivalents, but were granted in this manner
because the employees were based outside of the United States.
Performance Share Unit Awards
In 2003, the Company established a program to grant performance share units under the 1989 Restricted
Stock Award Plan to executives. In 2008, the Company expanded the program to award a mix of stock options
and performance share units to eligible employees in addition to executives. The number of shares earned is
determined at the end of each performance period, generally three years, based on the actual performance
criteria predetermined by the Board of Directors at the time of grant. If the performance criteria are met, the
award results in a grant of restricted stock or promises to grant restricted stock, which are then generally subject
to a holding period in order for the restricted stock to be released. For performance share units granted before
2008, this holding period is generally two years. For performance share units granted in 2008, this holding period
is generally one year. Restrictions on such stock generally lapse at the end of the holding period. Performance
share units generally do not pay dividends or allow voting rights 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 units require achievement of certain financial measures, primarily compound annual
growth in earnings per share or economic profit. These financial measures are adjusted for certain items
approved and certified by the Audit Committee of the Board of Directors. The purpose of these adjustments is
to ensure a consistent year to year comparison of the specific performance criteria. Economic profit is our net
operating profit after tax less the cost of the capital used in our business. In the event that the financial result
equals the predefined target, the Company will grant the number of restricted shares equal to the Target Award
in the underlying performance share units agreement. In the event the financial result exceeds the predefined
target, additional shares up to the Maximum Award may be granted. In the event the financial result falls below
the predefined target, a reduced number of shares may be granted. If the financial result falls below the
Threshold Award performance level, no shares will be granted. Performance share units are generally settled in
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