UPS 2009 Annual Report Download - page 102

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred Compensation Obligations and Treasury Stock
We maintain a deferred compensation plan whereby certain employees were previously able to elect to defer
the gains on stock option exercises by deferring the shares received upon exercise into a rabbi trust. The shares
held in this trust are classified as treasury stock, and the liability to participating employees is classified as
“deferred compensation obligations” in the shareowners’ equity section of the balance sheet. The number of
shares needed to settle the liability for deferred compensation obligations is included in the denominator in both
the basic and diluted earnings per share calculations. Employees are generally no longer able to defer the gains
from stock options exercised subsequent to December 31, 2004. Activity in the deferred compensation program
for the years ended December 31, 2009, 2008, and 2007 is as follows (in millions):
2009 2008 2007
Shares Dollars Shares Dollars Shares Dollars
Deferred Compensation Obligations
Balance at beginning of year ....................... $121 $137 $147
Reinvested dividends ............................. 3 5 4
Benefit payments ................................ (16) (21) (14)
Balance at end of year ............................ $108 $121 $137
Treasury Stock
Balance at beginning of year ....................... (2) $(121) (2) $(137) (3) $(147)
Reinvested dividends ............................. — (3) — (5) — (4)
Benefit payments ................................ — 16 — 21 1 14
Balance at end of year ............................ (2) $(108) (2) $(121) (2) $(137)
Noncontrolling Interests
We have noncontrolling interests in certain consolidated subsidiaries in our International Package and
Supply Chain & Freight segments. The noncontrolling interests acquired in 2009 primarily relate to the formation
of a joint venture in Dubai that will operate in the Middle East, Turkey, and portions of the Central Asia region,
as discussed in Note 6. The activity related to our noncontrolling interests is presented below:
2009 2008
Noncontrolling Interests
Balance at beginning of period ........................ $— $—
Acquired noncontrolling interests ...................... 66 —
Dividends attributable to noncontrolling interests ......... — —
Net income attributable to noncontrolling interests ........ — —
Balance at end of period ............................. $ 66 $—
NOTE 10. STOCK-BASED COMPENSATION
Incentive Compensation Plan
The UPS Incentive Compensation Plan permits the grant of nonqualified and incentive stock options, stock
appreciation rights, restricted stock and stock units, restricted performance shares and units, and management
incentive awards to eligible employees. The number of shares reserved for issuance under the Incentive
Compensation Plan is 80 million. Each share issued pursuant to an option and each share issued subject to the
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