Quest Diagnostics 2011 Annual Report Download - page 101

quarter at an average price per share of $56.21 for $251 million under an accelerated share repurchase transaction
(“ASR”) with a bank.
Under the ASR, in January 2010, the Company repurchased 4.5 million shares of the Company’s outstanding
common stock for an initial purchase price of $56.05 per share. The purchase price of these shares was subject to
an adjustment based on the volume weighted average price of the Company’s common stock during a period
following execution of the agreement. The total cost of the initial purchase was $250 million. The purchase price
adjustment was settled in the first quarter of 2010 and resulted in an additional cash payment of $0.7 million, for
a final purchase price of $251 million, or $56.21 per share.
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 purchased from SB
Holdings Capital Inc., a wholly-owned subsidiary of GSK, at an average price of $44.33 per share for $200
million.
For the years ended December 31, 2011, 2010 and 2009, the Company reissued 3.6 million shares, 2.1
million shares and 3.0 million shares, respectively, for employee benefit plans.
14. 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”). 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 an exercise price no less than the fair market value of
the Company’s common stock 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 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, the actual amount of performance share awards earned is based on the
achievement of the performance goals specified in the awards. Key executive, managerial and technical
employees are eligible to participate in the ELTIP. The provisions of the 1999 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 2005, the Company established 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 awards in 2009; and (iii) extending the term of the DLTIP until the date of
the 2019 annual shareholders’ meeting.
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)