Coca Cola 2010 Annual Report Download - page 126

NOTE 12: STOCK COMPENSATION PLANS
Our Company grants stock options and restricted stock awards to certain employees of the Company. Total stock-based
compensation expense was $380 million, $241 million and $266 million in 2010, 2009 and 2008, respectively, and was
included as a component of selling, general and administrative expenses in our consolidated statements of income. The
total income tax benefit recognized in our consolidated statements of income related to stock-based compensation
arrangements was $110 million, $68 million and $72 million in 2010, 2009 and 2008, respectively.
As of December 31, 2010, we had $457 million of total unrecognized compensation cost related to nonvested stock-
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.
As a result of our acquisition of CCE’s North American business, the Company assumed certain stock-based
compensation plans previously sponsored by CCE. Shares from these plans remain available for future grant to current
employees who were employees of CCE or its subsidiaries prior to the acquisition or who are hired by the Company or
its subsidiaries following the acquisition. The assumed Coca-Cola Enterprises Inc. 2001 Stock Option Plan, Coca-Cola
Enterprises Inc. 2004 Stock Award Plan and the Coca-Cola Enterprises Inc. 2007 Incentive Award Plan previously
sponsored by CCE have approximately 15 million shares available for grant after conversion of CCE common stock into
our common stock when all outstanding awards including restricted stock units and performance share units at target
level are included. The Company has not granted any equity awards from the assumed plans.
Stock Option Plans
The fair value of our stock option grants is amortized over the vesting period, generally four years. The fair value of
each option award is estimated on the grant date using a Black-Scholes-Merton option-pricing model. The weighted-
average fair value of options granted during the past three years and the weighted-average assumptions used in the
Black-Scholes-Merton option-pricing model for such grants were as follows:
2010 2009 2008
Fair value of options at grant date $ 9.39 $ 6.38 $ 9.81
Dividend yield12.9% 3.4% 2.3%
Expected volatility220.0% 20.0% 18.0%
Risk-free interest rate33.0% 2.8% 3.2%
Expected term of the option46 years 6 years 6 years
1The dividend yield is the calculated yield on the Company’s stock at the time of the grant.
2Expected volatility is based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s
stock, and other factors.
3The 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.
4The expected term of the option represents the period of time that options granted are expected to be outstanding and is derived
by analyzing historic exercise behavior.
Generally, stock options granted from 1999 through July 2003 expire 15 years from the date of grant and stock options
granted in December 2003 and thereafter expire 10 years from the date of grant. The shares of common stock to be
issued, transferred and/or sold under the stock option plans are 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. The Company had the following active stock option plans as of
December 31, 2010:
The Coca-Cola Company 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.
The Coca-Cola Company 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
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