ADT 2010 Annual Report Download - page 233

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Share Plans (Continued)
Under the SAYE Plan, eligible employees in the United Kingdom were granted options to
purchase shares at the end of three years of service at 85% of the market price at the time of grant.
Options under the SAYE Plan are generally exercisable after a period of three years and expire six
months after the date of vesting. The SAYE Plan provided for a maximum of 10 million common
shares to be issued. All of the shares purchased under the SAYE Plan were purchased on the open
market. The SAYE Plan was approved on November 3, 1999 for a ten year period and 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 24, 2010 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 25, 2009 ....... 375,906 $32.82
Exercised ............................ (41,422) 23.45
Expired .............................. (67,284) 26.08
Forfeited ............................. (23,296) 33.93
Outstanding as of September 24, 2010 ....... 243,904 36.16 0.9 $1
Vested and unvested expected to vest as of
September 24, 2010 ................... 185,008 36.08 0.9 $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 were $3.47 and $14.18, respectively. There were no options granted under the SAYE Plan
during 2010. The total intrinsic value of options exercised during 2010, 2009 and 2008 was $1 million,
$1 million and $3 million, respectively. The related excess cash tax benefit classified as a financing cash
inflow for 2010, 2009 and 2008 was not significant. As of September 24, 2010, there was $0.1 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 year.
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. Restrictions on the
award generally lapse upon normal retirement, if more than twelve months from the grant date, death
or disability of the employee.
The fair market value of restricted awards, both time vesting and those subject to specific
performance criteria, are expensed over the period of vesting. Restricted share awards that vest based
upon passage of time generally vest over a period of four years. The fair value of restricted share
awards is determined based on the closing market price of the Company’s shares on the grant date.
2010 Financials 145