Sysco 2010 Annual Report Download - page 82
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Please find page 82 of the 2010 Sysco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.options, restricted stock and restricted stock units under this plan. Vesting requirements for awards under this plan will vary by individual grant and
may include either time-based vesting or time-based vesting subject to acceleration based on performance criteria for fiscal periods of at least one
year. The contractual life of all options granted under this plan will be no greater than seven years. As of July 3, 2010, there were 32,193,732
remaining shares authorized and available for grant in total under the amended 2007 Stock Incentive Plan, of which the full 32,193,732 shares may be
issued as options or stock appreciation rights, or as a combination of up to 9,316,989 shares that may be issued as restricted stock, restricted stock
units or other types of stock-based awards with the remainder available for issuance as options or stock appreciation rights.
Sysco has also granted employee options under several previous employee stock option plans for which previously granted options remain
outstanding as of July 3, 2010. No new options will be issued under any of the prior plans, as future grants to employees will be made through the
amended 2007 Stock Incentive Plan or subsequently adopted plans. Vesting requirements for awards under these plans vary by individual grant and
include either time-based vesting or time-based vesting subject to acceleration based on performance criteria. The contractual life of all options
granted under these plans through July 3, 2004 is 10 years; options granted after July 3, 2004 have a contractual life of seven years.
In November 2009, Sysco’s 2009 Non-Employee Directors Stock Plan was adopted and provides for the issuance of up to 750,000 shares of
Sysco common stock for share-based awards to non-employee directors. The authorized shares may be granted as restricted stock, restricted stock
units, elected shares or additional shares. In addition, options and unvested common shares also remained outstanding as of July 3, 2010 under
previous non-employee director stock plans. No further grants will be made under these previous plans, as all future grants to non-employee
directors will be made through the 2009 Non-Employee Directors Stock Plan or subsequently adopted plans.Vesting requirements for awards under
these plans vary by individual grant and include either time-based vesting or vesting based on performance criteria. The contractual life of all options
granted under these plans through July 3, 2004 is 10 years; options granted after July 3, 2004 have a contractual life of seven years. As of July 3,
2010, there were 741,873 remaining shares authorized and available for grant in total under the 2009 Non-Employee Directors Stock Plan.
Stock Options
Certain of Sysco’s option awards are subject to graded vesting over a service period. In those cases, Sysco recognizes compensation cost on a
straight-line basis over the requisite service period for the entire award. In other cases, certain of Sysco’s option awards provide for graded vesting
over a service period but include a performance-based provision allowing for accelerated vesting. In these cases, if it is probable that the performance
condition will be met, Sysco recognizes compensation cost on a straight-line basis over the shorter performance period; otherwise, it will recognize
compensation cost over the longer service period.
In addition, certain of Sysco’s options provide that the options continue to vest as if the optionee continued to be an employee or director if the
optionee meets certain age and years of service thresholds upon retirement. In these cases, for awards granted through July 2, 2005, Sysco will
recognize the compensation cost for such awards over the service period and accelerate any remaining unrecognized compensation cost when the
employee retires. Due to the adoption of the fair value recognition provisions of the stock compensation accounting guidance, for awards granted
subsequent to July 2, 2005, Sysco will recognize compensation cost for such awards over the period from the grant date to the date the employee or
director first becomes eligible to retire with the options continuing to vest after retirement. If Sysco had recognized compensation cost for such
awards over the period from the grant date to the date the employee or the director first became eligible to retire with the options continuing to vest
after retirement for all periods presented, recognized compensation cost would not have been materially different for fiscal 2010. Recognized
compensation cost would have been $3.5 million and $8.3 million lower for fiscal 2009 and 2008, respectively.
The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average
assumptions for the periods indicated are noted in the following table. Expected volatility is based on historical volatility of Sysco’s stock, implied
volatilities from traded options on Sysco’s stock and other factors. Sysco utilizes historical data to estimate option exercise and employee
termination behavior within the valuation model; separate groups of employees that have similar historical exercise behavior are considered
separately for valuation purposes. Expected dividend yield is estimated based on the historical pattern of dividends and the average stock price for
the year preceding the option grant.The risk-free rate for the expected term of the option is based on the U.S.Treasury yield curve in effect at the time
of grant.
The following weighted-average assumptions were used for each fiscal year presented:
2010 2009 2008
Dividend yield ............................................................. 3.6% 3.2% 2.6%
Expected volatility .......................................................... 25.4% 34.7% 23.0%
Risk-free interest rate . . . .................................................... 2.3% 2.3% 3.8%
Expected life ............................................................. 4.9years 4.5 years 4.5 years
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