ADT 2007 Annual Report Download - page 247

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Share Plans (Continued)
The 2004 Plan provides for a maximum of 36 million common shares to be issued as Awards,
subject to adjustment as provided under the terms of the 2004 Plan. In addition, any common shares
that have been approved by the Company’s shareholders for issuance under the LTIP Plans but which
have not been awarded thereunder as of January 1, 2004, reduced by the number of common shares
related to Awards made under the LTIP Plans between January 1, 2004 and March 25, 2004, the date
the 2004 Plan was approved by shareholders, (or which have been awarded but will not be issued,
owing to expiration, forfeiture, cancellation, return to the Company or settlement in cash in lieu of
common shares on or after January 1, 2004) and which are no longer available for any reason
(including the termination of the LTIP Plans) will also be available for issuance under the 2004 Plan.
When common shares are issued pursuant to a grant of restricted share awards, deferred stock units,
promissory stock, and performance units or as payment of an annual performance bonus or other
stock-based award, the total number of common shares remaining available for grant will be decreased
by a margin of at least 1.8 per common share issued. At September 28, 2007, there were approximately
31 million shares available for future grant under the 2004 Plan (including shares available under both
the LTIP I and LTIP II Plans that are now assumable under the 2004 Plan).
The 1994 Plan provided for the issuance of restricted stock grants to officers and non-officer
employees. The 1994 Plan expired in November 2004; thus no additional grants of restricted stock have
been made under this plan since November 2004 and no shares are available for future grant. At
September 28, 2007, 14 million shares had been granted, of which 10 million were granted under the
2004 Plan and 4 million were granted under the 1994 Plan.
The LTIP I Plan reserved common shares for issuance to Tyco’s directors, executives and managers
as share options. This plan is administered by the Compensation and Human Resources Committee of
the Board of Directors of the Company, which consists exclusively of independent directors of the
Company. At September 28, 2007, there were approximately 0.5 million shares originally reserved for
issuance under this plan but now available for future grant under the 2004 Plan.
The LTIP II Plan was a broad-based option plan for non-officer employees. The terms and
conditions of this plan are similar to the LTIP I Plan. At September 28, 2007, there were approximately
0.1 million shares originally reserved for issuance under this plan that are now available for future
grant under the 2004 Plan.
Share Options—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 under the 2004 Plan. Options are generally exercisable in
equal annual installments over a period of three or four years and will generally expire 10 years after
the date of grant.
At September 28, 2007, approximately 250 million share options had been granted of which
138 million, 76 million and 36 million were granted under the LTIP I, LTIP II and 2004 Plans,
respectively.
The grant-date fair value of each option grant is estimated using the Black-Scholes option pricing
model. The fair value is then amortized on a straight-line basis over the requisite service periods of the
awards, which is generally the vesting period. Use of a valuation model requires management to make
2007 Financials 155