Coca Cola 2010 Annual Report Download - page 129

The following table summarizes information about the conversions of performance share units to restricted stock and
restricted stock units:
Weighted-Average
Share Units Grant-Date
(In thousands) Fair Value1
Nonvested on January 1, 2010 678 $ 39.25
Granted:
Restricted stock 461 44.62
Restricted stock units2368 41.77
Vested and released (685) 39.50
Canceled/forfeited (25) 39.74
Nonvested on December 31, 20103797 $ 43.29
1The weighted-average grant-date fair value is based on the fair values of the performance share units grant fair values.
2These awards are similar to restricted stock, including the payment of dividend equivalents, but were granted in this manner
because the employees were based outside the United States.
3The nonvested shares as of December 31, 2010, are presented at the actual award amount.
The total intrinsic value of restricted shares that were vested and released was $58 million, $66 million and $23 million
in 2010, 2009 and 2008, respectively. The total restricted share units vested and released were 925,233 in 2010, which
included 685,383 of shares released at the target award amount. In 2009 and 2008, the total restricted share units vested
and released were 1,269,604 and 437,871, respectively.
Replacement performance share unit awards issued by the Company in connection with our acquisition of CCE’s North
American business are not included in the tables or discussions above and were originally granted under the Coca-Cola
Enterprises Inc. 2007 Incentive Award Plan. Refer to Note 2. These awards were converted into equivalent share units
of the Company’s common stock on the acquisition date, and entitle the participant to dividend equivalents (which vest,
in some cases, only if the restricted share unit vest), but not the right to vote. Accordingly, the fair value of these units
was the quoted value of the Company’s stock at the grant date. The number of shares earned is determined at the end
of each performance period, generally one to three years, based on the actual performance criteria predetermined at
the time of grant. These performance share units require achievement of certain financial measures, primarily
compound annual growth in earnings per share, as adjusted for certain items detailed in the plan documents. In the
event the financial results exceed the predefined targets, additional shares up to a maximum of 200 percent of target
may be granted. In the event the financial results fall below the predefined targets, a reduced number of shares may be
granted. If the financial results fall below the minimum award performance level, no shares will be granted.
On the acquisition date, the Company issued approximately 1.6 million replacement performance share unit awards at
target with a weighted average grant-date price of $59.12 per share unit for the 2008-2010, 2009, and 2010 performance
periods. The 2008-2010 and the 2010 performance period awards were projected to payout at 200 percent on the
acquisition date, and were certified as such in February 2011. The 2009 award was already certified at 200 percent prior
to the acquisition date. As a result, the Company expects to issue approximately 3.2 million shares related to the
certified 2009 performance period and the projected 2008-2010 and 2010 performance periods.
In accordance with accounting principles generally accepted in the United States, the portion of the fair value of the
replacement awards related to services provided prior to the business combination was included in the total purchase
price. Refer to Note 2. The portion of the fair value associated with future service is recognized as expense over the
future service period. However, in the fourth quarter of 2010, the Company modified primarily all of these performance
awards to eliminate the remaining holding period after December 31, 2010, which resulted in approximately $74 million
of accelerated expense included in the total stock-based compensation expense above. As a result of this modification,
the Company released approximately 1.4 million shares at the 200 percent payout for the 2009 performance period
award during the fourth quarter of 2010. The intrinsic value of the release of these shares was approximately
$91 million. As of December 31, 2010, the Company had outstanding replacement performance share units of
approximately 931,000 at target. The majority of the remaining shares are scheduled for release in the first quarter of
2011.
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