Coca Cola 2011 Annual Report Download - page 117

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, 2011 797 $ 43.29
Granted:
Restricted stock units22,311 53.08
Vested and released (1,024) 45.72
Canceled/forfeited (17) 43.71
Nonvested on December 31, 201132,067 $ 53.05
1The weighted-average grant-date fair value is based on the fair values of the performance share units grant fair values.
2The granted shares are presented at the performance share units target award amount. An additional 173,360 restricted stock units were granted
based on the financial results of the 2008–2010 performance period.
3The nonvested shares as of December 31, 2011, are presented at the performance share units target award amount. An additional 154,500 shares
were outstanding and nonvested as of December 31, 2011.
The total intrinsic value of restricted shares that were vested and released was $72 million, $58 million and $66 million in 2011,
2010 and 2009, respectively. The total restricted share units vested and released were 1,042,456 in 2011, which included 1,023,597
of shares released at the target award amount. In 2010 and 2009, the total restricted share units vested and released were 925,233
and 1,269,604, 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
units 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 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 pay out 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. 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 $74 million of accelerated expense included in the total stock-based compensation expense above. As a result of
this modification, the Company released 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 $91 million. In addition, the Company
released 1.5 million shares at the 200 percent payout, primarily related to the 2008–2010 and 2010 performance periods during
2011. The intrinsic value of the release of these shares was $98 million. As of December 31, 2011, the Company had outstanding
replacement performance share units of 0.3 million at the 200 percent payout primarily for the 2009 performance period. The
majority of the remaining shares are scheduled for release in the second quarter of 2012.
Time-Based and Performance-Based Restricted Stock and Restricted Stock Unit Awards
The Coca-Cola Company 1989 Restricted Stock Award Plan allows for the grant of time-based and performance-based
restricted stock and restricted stock units. The performance-based restricted awards are released only upon the achievement of
specific measurable performance criteria. These awards pay dividends during the performance period. The majority of awards
115