ADT 2001 Annual Report Download - page 67

65
deduction for the excess, if any, of the fair market value of
restricted shares at the time of vesting over their fair market
value at the time of the grants and from the payment of divi-
dends on unvested shares, are credited to contributed surplus.
EMPLOYEE STOCK PURCHASE PLAN
Substantially all full-time employees of the Company’s U.S.
subsidiaries and employees of certain qualified non-U.S. sub-
sidiaries are eligible to participate in an employee share pur-
chase plan. Eligible employees authorize payroll deductions to
be made for the purchase of shares. The Company matches a
portion of the employee contribution by contributing an addi-
tional 15% of the employee’s payroll deduction. All shares pur-
chased under the plan are purchased on the open market by a
designated broker.
SHARE OPTIONS
Tyco has granted employee share options which were issued
under two fixed share option plans which reserve common
shares for issuance to Tyco’s directors, executives and managers.
The majority of options have been granted under the Tyco Inter-
national Ltd. Long-Term Incentive Plan (the “Incentive Plan”).
The Incentive Plan is administered by the Compensation Com-
mittee of the Board of Directors of the Company, which consists
exclusively of independent directors of the Company. Options
are granted to purchase common shares at prices which are
equal to or greater than the market price of the common shares
on the date the option is granted. Conditions of vesting are
determined at the time of grant. Options which have been
granted under the Incentive Plan to date have generally vested
and become exercisable over periods of up to five years from the
date of grant and have a maximum term of ten years. Tyco has
reserved 140.0 million common shares for issuance under the
Incentive Plan. Awards which Tyco becomes obligated to make
through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired company are assumed
and administered under the Incentive Plan but do not count
against this limit. At September 30, 2001, there were approxi-
mately 32.8 million shares available for future grant under the
Incentive Plan. During October 1998, a broad-based option plan
for non-officer employees, the Tyco Long-Term Incentive Plan II
(“LTIP II”), was approved by the Board of Directors. Tyco has
reserved 100.0 million common shares for issuance under the
LTIP II. The terms and conditions of this plan are similar to the
Incentive Plan. At September 30, 2001, there were approximately
43.4 million shares available for future grant under the LTIP II.
Options assumed as part of business combination transac-
tions are administered under the Incentive Plan but retain all
the rights, terms and conditions of the respective plans under
which they were originally granted.
Share option activity for all Tyco plans since September 30,
1998 is as follows:
WEIGHTED-
AVERAGE
EXERCISE
OUTSTANDING PRICE
At September 30, 1998 94,451,156 $24.83
Assumed from acquisition 8,883,160 37.44
Granted 30,313,362 38.44
Exercised (43,180,390) 22.79
Canceled (4,476,021) 47.83
At September 30, 1999 85,991,267 27.91
Granted 30,355,027 44.30
Exercised (17,240,959) 20.72
Canceled (4,090,184) 37.25
At September 30, 2000 95,015,151 32.01
Assumed from acquisition 19,094,534 33.27
Granted 33,731,727 50.53
Exercised (21,543,189) 25.32
Canceled (6,051,186) 41.06
At September 30, 2001 120,247,037 39.44