Tyson Foods 2006 Annual Report Download - page 48

As of September 30, 2006, the Company had $42 million of total
unrecognized compensation cost related to restricted stock awards
that will be recognized over a weighted average period of 1.5 years.
The Company recognized stock-based compensation expense
related to restricted stock, net of income taxes, of $15 million,
$15 million and $10 million for years 2006, 2005 and 2004, respec-
tively. The related tax benefit for years 2006, 2005 and 2004 was
$9 million, $9 million and $6 million, respectively.
PERFORMANCE-BASED SHARES
In July 2003, the Compensation Committee authorized the Company
to award performance-based shares of the Company’s Class A stock
having an initial maximum aggregate value of $4 million on the date
of each award to certain senior executive officers on the first busi-
ness day of each of the Company’s 2004, 2005 and 2006 fiscal years.
In August 2005 and September 2004, the Compensation Committee
authorized the expansion of the fiscal 2006 and fiscal 2005 awards
to include additional senior officers. The expansions increased
the initial maximum aggregate value by $3 million and $2 million
for the 2006 and 2005 grants, respectively. The vesting of the
performance-based shares for the 2004 and 2005 awards is over
three years, and the vesting of the 2006 award is over two and
one-half to three years (the Vesting Period), each award being
subject to the attainment of Company goals determined by
the Compensation Committee prior to the date of the award. The
Company reviews progress toward the attainment of Company
goals each quarter during the Vesting Period. The attainment of
Company goals can be determined only at the end of the Vesting
Period. If the shares vest, the ultimate cost to the Company will be
equal to the Class A stock price on the date the shares vesttimes
the number of shares awarded for all performance grants with other
than market criteria. For grants with market performance criteria,
the ultimate cost will be the fair value of the probable shares to
vest regardless if the shares actually vest. Total expense recorded
under SFAS No. 123R related to performance-based shares is
approximately $1 million in fiscal 2006.
NOTE 12 PENSIONS AND OTHER POSTRETIREMENT BENEFITS
The Company has both funded and unfunded noncontributory
defined benefit pension plans covering specific groups of employ-
ees. Two plans provide benefits based on a formula using years of
service and a specified benefit rate. Effective January 1, 2004, the
Company implemented a new defined benefit plan for certain
contracted officers that uses a formula based on years of service
and final average salary. Additionally, two of the Company’s sub-
sidiaries have frozen plans, whereby no new participants will be
added and no future benefits will be earned. The Company also has
other postretirement benefit plans for which substantially all of its
employees may receive benefits if they satisfy applicable eligibility
criteria. The postretirement healthcare plans are contributory with
participants’ contributions adjusted when deemed necessary.
The Company has defined contribution retirement and incentive
benefit programs for various groups of Company personnel.
Company contributions totaled $55 million, $56 million and
$55 million in fiscal 2006, 2005 and 2004, respectively.
46 Ty s on Foods, Inc. 2006 Annual Report
Notes to Consolidated Financial Statements continued
RESTRICTED STOCK
The Company issues restricted stock at the market value as of the date of grant, with restrictions expiring over periods through July 1, 2020.
Unearned compensation is recognized over the vesting period for the particular grant using a straight-line method.
Weighted Weighted
Average Average Aggregate
Grant-Date Remaining Intrinsic
Number of Fair Value Contractual Value
Shares Per ShareLife (in Years) (in millions)
Nonvested, October 1, 2005 9,126,656 $12.42
Granted 1,007,613 15.79
Dividends 100,025 14.92
Vested (440,786) 12.17
Forfeited (305,522) 14.53
Nonvested, September 30, 2006 9,487,986 12.73 1.5 $151