Kraft 2009 Annual Report Download - page 52

options vest in three annual installments beginning on the first anniversary of the grant date. Additionally, we changed our long-term incentive plan
from a cash-based program to a share-based program. These shares vest based on varying performance, market and service conditions. The
unvested long-term incentive plan shares have no voting rights and do not pay dividends.
In January 2009, we granted 1.5 million shares of stock in connection with our long-term incentive plan. The market value per share was $27.00
on the date of grant. In February 2009, as part of our annual equity program, we issued 4.1 million shares of restricted and deferred stock to
eligible employees. The market value per restricted or deferred share was $23.64 on the date of grant. Also, as part of our annual equity program,
we granted 16.3 million stock options to eligible employees at an exercise price of $23.64.
We also issued 0.2 million off-cycle shares of restricted and deferred stock during 2009. The weighted-average market value per restricted or
deferred share was $25.55 on the date of grant. In aggregate, we issued 5.8 million restricted and deferred shares during 2009.
At December 31, 2009, the number of shares to be issued upon exercise of outstanding stock options, vesting of non-U.S. deferred shares and
vesting of long-term incentive plan shares was 52.8 million or 3.6% of total shares outstanding.
In January 2008, we granted 1.4 million shares of stock in connection with our long-term incentive plan. The market value per share was $32.26
on the date of grant. In February 2008, as part of our annual equity program, we issued 3.4 million shares of restricted and deferred stock to
eligible employees. The market value per restricted or deferred share was $29.49 on the date of grant. Also, as part of our annual equity program,
we granted 13.5 million stock options to eligible employees at an exercise price of $29.49.
In addition, we issued 0.2 million off-cycle shares of restricted and deferred stock during 2008. The weighted-average market value per restricted
or deferred share was $30.38 on the date of grant. In aggregate, we issued 5.0 million restricted and deferred shares during 2008. We also
granted 0.1 million off-cycle stock options during 2008 at an exercise price of $30.78. In aggregate, we granted 13.6 million stock options during
2008.
Our Board of Directors approved a stock option grant to our Chief Executive Officer on May 3, 2007, to recognize her election as our Chairman.
She received 300,000 stock options, which vest under varying market and service conditions and expire ten years after the grant date.
In January 2007, we issued 5.2 million shares of restricted and deferred stock to eligible employees as part of our annual equity program. The
market value per restricted or deferred share was $34.655 on the date of grant. Additionally, we issued 1.0 million off-cycle shares of restricted
and deferred stock during 2007. The weighted-average market value per restricted or deferred share was $34.085 on the date of grant. The total
number of restricted and deferred shares issued in 2007 was 9.2 million, including those issued as a result of our spin-off from Altria (discussed
below).
Upon our spin-off, Altria stock awards were modified through the issuance of Kraft Foods stock awards, and accordingly, the Altria stock awards
were split into two instruments. Holders of Altria stock options received: 1) a new Kraft Foods option to acquire shares of Kraft Foods Common
Stock; and 2) an adjusted Altria stock option for the same number of shares of Altria common stock previously held, but with a proportionally
reduced exercise price. For each employee stock option outstanding, the aggregate intrinsic value immediately after our spin-off from Altria was
not greater than the aggregate intrinsic value immediately prior to it. Holders of Altria restricted stock or stock rights awarded before January 31,
2007, retained their existing awards and received restricted stock or stock rights in Kraft Foods Common Stock. Recipients of Altria restricted
stock or stock rights awarded on or after January 31, 2007, did not receive Kraft Foods restricted stock or stock rights because Altria had
announced the spin-off at that time. We reimbursed Altria $179 million for net settlement of the employee stock awards. We determined the fair
value of the stock options using the Black-Scholes option valuation model, and adjusted the fair value of the restricted stock and stock rights by
the value of projected forfeitures.
Based upon the number of Altria stock awards outstanding at the time of our spin-off, we granted stock options for 24.2 million shares of Common
Stock at a weighted-average price of $15.75. The options expire between 2007 and
49
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠