ADT 2011 Annual Report Download - page 254

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Share Plans
Tyco share-based compensation cost recognized during 2011, 2010 and 2009 was $110 million,
$120 million, and $99 million, respectively, all of which is included in selling, general and administrative
expenses. The Company has recognized a related tax benefit associated with its share-based
compensation arrangements during 2011, 2010 and 2009 of $31 million, $35 million and $25 million,
respectively.
During 2004, the Tyco International Ltd. 2004 Stock and Incentive Plan (the ‘‘2004 Plan’’)
effectively replaced the Tyco International Ltd. Long Term Incentive Plan, as amended as of May 12,
1999 (the ‘‘LTIP I Plan’’) and the Tyco International Ltd. Long Term Incentive Plan II (the ‘‘LTIP II
Plan’’) for all awards effective on and after March 25, 2004. The 2004 Plan provides for the award of
stock options, stock appreciation rights, annual performance bonuses, long term performance awards,
restricted units, restricted shares, deferred stock units, promissory stock and other stock-based awards
(collectively, ‘‘Awards’’).
The 2004 Plan provides for a maximum of 40 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 there under 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 a full value Award (restricted stock, RSUs and
PSUs), 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. As of September 30, 2011, there were approximately
19 million shares available for future grant under the 2004 Plan.
The LTIP I Plan reserved common shares for issuance to Tyco’s directors, executives and managers
as share options. During 2011, there were approximately 0.6 million shares originally reserved for
issuance under this plan, that became available for future grant under the 2004 Plan due to expiration,
forfeiture or cancellation. As of September 30, 2011, 0.3 million options remained outstanding which
were granted under the LTIP I prior to its termination.
The LTIP II Plan was a broad-based option plan for non-officer employees. The terms and
conditions of this plan were similar to the LTIP I Plan. During 2011, there were approximately
1.8 million shares originally reserved for issuance under this plan that became available for future grant
under the 2004 Plan due to expiration, forfeiture or cancellation. As of September 30, 2011, 1.0 million
options remained outstanding which were granted under the LTIP II prior to its termination.
Share Options—Options are granted to purchase common shares at prices that are equal to or
greater than the closing 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 four years and will generally expire 10 years
after the date of grant. Historically, the Company’s practice has been to settle stock option exercises
through either newly issued shares or from shares held in treasury.
2011 Financials 151