Coca Cola 2013 Annual Report Download - page 108

Performance Share Unit Awards
In 2003, the Company established a program to grant performance share units under The Coca-Cola Company 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 restricted stock units,
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 and after, 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. For awards granted prior to 2011,
participants generally receive dividends or dividend equivalents once the performance criteria have been certified and the
restricted stock or restricted stock units have been issued. For awards granted in 2011 and later, participants generally receive
dividends or dividend equivalents once the shares have been released. Accordingly, the fair value of the performance share units is
the quoted market value of the Company stock on the grant date less the present value of the expected dividends not received
during the relevant period. In the period it becomes probable that the minimum performance criteria specified in the plan will be
achieved, we recognize expense for the proportionate share of the total fair value of the performance share units related to the
vesting period that has already lapsed. The remaining cost of the grant is expensed on a straight-line basis over the balance of the
vesting period. In the event the Company determines it is no longer probable that we will achieve the minimum performance
criteria specified in the plan, we reverse all of the previously recognized compensation expense in the period such a determination
is made.
Performance share units under The Coca-Cola Company 1989 Restricted Stock Award Plan 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 the financial results equal the predefined
target, the Company will grant the number of restricted shares equal to the target award in the underlying performance share unit
agreements. In the event the financial results exceed the predefined target, additional shares up to the maximum award may be
granted. In the event the financial results fall below the predefined target, a reduced number of shares may be granted. If the
financial results fall below the threshold award performance level, no shares will be granted. Performance share units are generally
settled in stock, except for certain circumstances such as death or disability, where former employees or their beneficiaries are
provided a cash equivalent payment. As of December 31, 2013, performance share units of 5,365,000, 6,487,000 and 6,122,000
were outstanding for the 2011-2013, 2012-2014 and 2013-2015 performance periods, respectively, based on the target award
amounts in the performance share unit agreements.
The following table summarizes information about performance share units based on the target award amounts in the
performance share unit agreements:
Weighted-Average
Share Units Grant Date
(In thousands) Fair Value
Outstanding on January 1, 2013 17,584 $ 28.01
Granted 6,425 32.67
Conversions of restricted stock units1(5,220) 25.17
Paid in cash equivalent (55) 32.25
Canceled/forfeited (760) 30.33
Outstanding on December 31, 2013217,974 $ 30.41
1Represents the target amount of performance share units converted to restricted stock units based on the financial results for the 2010–2012
performance period. The vesting of restricted stock units is subject to the terms of the performance share unit agreements.
2The outstanding performance share units as of December 31, 2013, at the threshold award and maximum award levels were 9.0 million and
27.0 million, respectively.
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