ADT 2009 Annual Report Download - page 247

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Share Plans (Continued)
was approved on November 3, 1999 for a ten year period and has expired according to its terms on
November 3, 2009. The International Benefits Oversight Committee has not approved any additional
grants since the last annual grant on October 9, 2008 and it has not applied for approval of a
replacement for the SAYE Plan at this time.
A summary of option activity under the SAYE Plan as of September 25, 2009 and changes during
the year then ended is presented below:
Weighted-
Average Aggregate
Weighted- Remaining Intrinsic
Average Contractual Term Value
Shares Exercise Price (in years) ($ in millions)
Outstanding as of September 26, 2008 ....... 612,319 $27.65
Granted ............................. 126,186 34.41
Exercised ............................ (251,619) 21.50
Expired ............................. (75,820) 31.87
Forfeited ............................ (35,160) 31.70
Outstanding as of September 25, 2009 ....... 375,906 32.82 1.5 $1
Vested and unvested expected to vest as of
September 25, 2009 ................... 342,194 32.53 1.4 1
Exercisable as of September 25, 2009 ....... 85,405 21.46 — 1
The grant-date-fair value of each option grant is estimated using the Black-Scholes option pricing
model. Assumptions for expected volatility, the average expected life, the risk-free rate, as well as the
expected annual dividend per share were made using the same methodology as previously described
under Share Options.
The weighted-average grant-date fair values of options granted under the SAYE Plan during 2009
and 2008 was $3.47 and $14.18, respectively. There were no options granted under the SAYE Plan
during 2007. The total intrinsic value of options exercised during 2009, 2008 and 2007 was $1 million,
$3 million and $5 million, respectively. The related excess cash tax benefit classified as a financing cash
inflow for 2009, 2008 and 2007 was not significant.
As of September 25, 2009, there was $1 million in total unrecognized compensation cost related to
non-vested options granted under the SAYE Plan. The cost is expected to be recognized over a period
of 1.1 fiscal years.
Restricted Share Awards—Restricted share awards are granted subject to certain restrictions.
Conditions of vesting are determined at the time of grant under the 2004 Plan. All restrictions on the
award will lapse upon normal retirement, death or disability of the employee.
The fair market value of units with certain specified performance criteria are expensed over the
period of vesting. For grants that vest through passage of time, the fair market value of the award at
the time of the grant is amortized to expense over the period of vesting. The fair value of restricted
share awards is determined based on the market value of the Company’s shares on the grant date.
Restricted share awards generally vest over a period of three or four years, as determined by the
Compensation Committee, and with respect to performance awards upon attainment of various levels
of performance that equal or exceed targeted levels. The compensation expense recognized for
restricted share awards is net of estimated forfeitures.
2009 Financials 155