Sysco 2009 Annual Report Download - page 75

Employees’ Stock Purchase Plan
Sysco has an Employees’ Stock Purchase Plan that permits employees to invest in Sysco common stock by means of periodic payroll deductions
at 85% of the closing price on the last business day of each calendar quarter. In November 2007, the Employees’ Stock Purchase Plan was amended
to reserve an additional 6,000,000 shares of Sysco common stock for issuance under the plan. Including the additional 6,000,000 shares reserved
in fiscal 2008, the total number of shares which may be sold pursuant to the plan may not exceed 74,000,000 shares, of which 5,384,982 remained
available as of June 27, 2009.
During fiscal 2009, 2,031,695 shares of Sysco common stock were purchased by the participants as compared to 1,769,421 shares purchased
in fiscal 2008 and 1,708,250 shares purchased in fiscal 2007. In July 2009, 540,517 shares were purchased by participants.
The weighted average fair value of employee stock purchase rights issued pursuant to the Employees’ Stock Purchase Plan was $3.85, $4.81 and
$5.02 per share during fiscal 2009, 2008 and 2007, respectively. The fair value of the stock purchase rights was calculated as the difference
between the stock price at date of issuance and the employee purchase price.
Management Incentive Compensation
Sysco’s Management Incentive Plan compensates key management personnel for specific performance achievements.With respect to bonuses
for fiscal 2008 and earlier years, the bonuses earned and expensed under this plan were paid in the following fiscal year in both cash and stock or
deferred for payment in future years at the election of each participant. The stock awards under this plan immediately vested upon issuance;
however, participants are restricted from selling, transferring, giving or otherwise conveying the shares for a period of two years from the date of
issuance of such shares.The fair value of the stock issued under the Management Incentive Plan was based on the stock price less a 12% discount for
post-vesting restrictions. The discount for post-vesting restrictions is estimated based on restricted stock studies and by calculating the cost of a
hypothetical protective put option over the restriction period. In May 2008, the Management Incentive Plan was amended to remove the stock
component of the bonus structure. Therefore, there will be no stock award component for the fiscal 2009 bonus or any future bonuses under this
plan.
A total of 672,087 shares, 588,143 shares and 323,822 shares at a fair value of $28.22, $32.99 and $30.56, respectively, were issued pursuant
to this plan in fiscal 2009, 2008 and 2007, respectively, for bonuses earned in the preceding fiscal years.
Non-Employee Director Stock Grants
Prior to fiscal 2008, one-time retainer awards were granted to newly elected directors under the 2005 Non-Employee Directors Stock Plan.
These awards were of 6,000 shares of Sysco common stock that vest one-third every year over a three-year period. In fiscal 2007, 12,000 shares in
the aggregate of restricted stock were granted to two non-employee directors as one-time retainer awards under the 2005 Non-Employee Directors
Stock Plan. The 2005 Non-Employee Directors Stock Plan was amended during fiscal 2008 to discontinue the issuance of one-time retainer awards
under the plan.
In addition, there are one-time retainer awards outstanding under the Non-Employee Directors Stock Plan, which was replaced by the 2005
Non-Employee Directors Stock Plan. The remaining outstanding unvested awards under this plan vest over a six-year period if certain earnings goals
are met.
The 2005 Non-Employee Directors Stock Plan provides for the issuance of restricted stock to current non-employee directors. During fiscal
2009, 2008 and 2007, 65,631, 52,430 and 30,000 shares, respectively, of restricted stock were granted to non-employee directors. These shares
will vest ratably over a three-year period.
The total amount of unvested shares related to the one-time retainer awards and other restricted stock awards as of June 27, 2009 was not
significant.
Under the 2005 Non-Employee Directors Stock Plan, non-employee directors may also elect to receive up to 50% of their annual directors’ fees
in Sysco common stock. Sysco provides a matching grant of 50% of the number of shares received for the stock election. As a result of such
elections, a total of 21,966, 13,051 and 11,721 shares with a weighted-average grant date fair value of $27.49, $33.33 and $33.80 per share were
issued in fiscal 2009, 2008 and 2007, respectively.
All Share-Based Payment Arrangements
The total share-based compensation cost that has been recognized in results of operations was $56,030,000, $80,650,000 and $97,985,000
for fiscal 2009, 2008 and 2007, respectively, and is included within operating expenses in the consolidated results of operations. The total income
tax benefit recognized in results of operations for share-based compensation arrangements was $9,907,000, $15,722,000, and $21,549,000 for
fiscal 2009, 2008 and 2007, respectively.
As of June 27, 2009, there was $63,746,000 of total unrecognized compensation cost related to share-based compensation arrangements.
That cost is expected to be recognized over a weighted-average period of 2.97 years.
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