Alcoa 2009 Annual Report Download - page 128
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In March 2009, the quarterly common stock dividend was reduced from $0.17 per share to $0.03 per share in
connection with a series of financial actions initiated to improve liquidity.
As of December 31, 2009, 109 million shares of common stock were reserved for issuance under Alcoa’s stock-based
compensation plans. Alcoa issues shares from treasury stock to satisfy the exercise of stock options and the conversion
of stock awards.
Alcoa has a share repurchase program that authorizes the purchase of up to 25% (or approximately 217 million shares)
of its outstanding common stock at December 31, 2006, in the open market or through privately negotiated
transactions, directly or through brokers or agents, and expires on December 31, 2010. During 2008, Alcoa repurchased
33 million shares, leaving approximately 116 million shares that may yet be repurchased under the current program. In
October 2008, Alcoa elected to suspend share repurchases to preserve liquidity in light of the global economic
downturn.
Share Activity (number of shares)
Common stock
Treasury Outstanding
Balance at end of 2006 56,834,994 867,739,544
Repurchased 67,712,689 (67,712,689)
Issued for stock-based compensation plans (27,374,945) 27,374,945
Balance at end of 2007 97,172,738 827,401,800
Repurchased 33,421,626 (33,421,626)
Issued for stock-based compensation plans (6,337,194) 6,337,194
Balance at end of 2008 124,257,170 800,317,368
Repurchased --
Public offering - 172,500,000
Issued for stock-based compensation plans (1,561,452) 1,561,452
Balance at end of 2009 122,695,718 974,378,820
Stock-based Compensation
Stock options under Alcoa’s stock-based compensation plans have been granted at not less than market prices on the
dates of grant. Performance stock options are also granted to certain individuals. For performance stock options granted
in 2009, the final number of options granted is based on Alcoa’s adjusted free cash flow against a pre-established
target. For performance stock options granted in 2008 and 2007, the final number of options granted is based on the
outcome of Alcoa’s annual return on capital results against the results of a comparator group of companies. Stock
option features based on date of original grant are as follows:
Date of
original grant Vesting Term Reload feature
2002 and prior One year 10 years One reload
over option term
2003 3 years
(1/3 each year)
10 years One reload in 2004 for 1/3
vesting in
2004
2004 – 2009 3 years
(1/3 each year)
6 years None
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