Quest Diagnostics 2009 Annual Report Download - page 100

Share Repurchase Plan
For the year ended December 31, 2009, the Company repurchased 10.0 million shares of its common stock
at an average price of $49.83 per share for $500 million, including 4.5 million shares repurchased from SB
Holdings Capital Inc., a wholly-owned subsidiary of GlaxoSmithKline plc., at an average price of $44.33 per
share for $200 million. For the year ended December 31, 2008, the Company repurchased 5.5 million shares of
its common stock at an average price of $46.09 per share for $254 million. For the year ended December 31,
2007, the Company repurchased 2.8 million shares of its common stock at an average price of $52.14 per share
for $146 million.
For the years ended December 31, 2009, 2008 and 2007, the Company reissued 3.0 million shares, 1.5
million shares and 2.9 million, respectively, for employee benefit plans. At December 31, 2009, previous share
repurchase authorizations were fully utilized.
13. STOCK OWNERSHIP AND COMPENSATION PLANS
Employee and Non-employee Directors Stock Ownership Programs
In 2005, the Company established the ELTIP to replace the Company’s prior Employee Equity Participation
Programs established in 1999 (the “1999 EEPP”) and 1996, as amended (the “1996 EEPP”). At the Company’s
annual shareholders’ meeting in May 2009, the shareholders approved certain amendments to the ELTIP
including: (i) increasing the number of shares available for award under the ELTIP by approximately 5.2 million
shares; (ii) increasing the maximum term that the Board of Directors may establish for awards of stock options
and stock appreciation rights from seven to ten years, beginning with awards in 2009; and (iii) extending the
term of the ELTIP until the date of the 2019 annual shareholders’ meeting.
The ELTIP provides for three types of awards: (a) stock options, (b) stock appreciation rights and (c) stock
awards. The ELTIP provides for the grant to eligible employees of either non-qualified or incentive stock options,
or both, to purchase shares of Company common stock at a price of no less than the fair market value on the
date of grant. The stock options are subject to forfeiture if employment terminates prior to the end of the vesting
period prescribed by the Board of Directors. Grants of stock appreciation rights allow eligible employees to
receive a payment based on the appreciation of Company common stock in cash, shares of Company common
stock or a combination thereof. The stock appreciation rights are granted at an exercise price at no less than the
fair market value of the Company’s common stock on the date of grant. Stock options and stock appreciation
rights granted under the ELTIP expire on the date designated by the Board of Directors but in no event more
than ten years from date of grant. No stock appreciation rights have been granted under the ELTIP or the 1999
EEPP. The ELTIP allows eligible employees to receive awards of shares, or the right to receive shares, of
Company common stock, the equivalent value in cash or a combination thereof. These shares are generally
earned on achievement of financial performance goals and are subject to forfeiture if employment terminates prior
to the end of the vesting period prescribed by the Board of Directors. For performance share unit awards granted
prior to 2008, the actual amount of performance share awards earned is based on the Company’s earnings per
share growth for the performance period compared to that of a peer group of companies. Beginning with
performance share unit awards granted in 2008, the performance measure for these awards is based on the
compound annual growth rate of the Company’s earnings per share from continuing operations over a three year
period. Key executive, managerial and technical employees are eligible to participate in the ELTIP. The
provisions of the 1999 EEPP and the 1996 EEPP were similar to those outlined above for the ELTIP. Certain
options granted under the 1999 EEPP remain outstanding.
The maximum number of shares of Company common stock that may be optioned or granted under the
ELTIP is approximately 53 million shares. In addition, any remaining shares under the 1996 EEPP are available
for issuance under the ELTIP.
In 2005, the Company established the Amended and Restated Director Long-Term Incentive Plan (the
“DLTIP”), to replace the Company’s prior plan established in 1998. At the Company’s annual shareholders’
meeting in May 2009, the shareholders approved certain amendments to the DLTIP including: (i) increasing the
number of shares available for award under the DLTIP by 0.4 million shares; (ii) increasing the maximum term
that the Board of Directors may establish for awards of stock options from seven to ten years, beginning with
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)