Raytheon 2009 Annual Report Download - page 109

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the 1997 Nonemployee Directors Restricted Stock Plan, there were 6.0 million shares available for awards under such
plans as of December 31, 2009.
Restricted Stock
The 2001 Stock Plan provides for the award of restricted stock, restricted stock units and stock appreciation rights. The
1997 Nonemployee Directors Restricted Stock Plan provides for the award of restricted stock to nonemployee directors.
Awards of restricted stock, restricted stock units and stock appreciation rights generally are made by the Management
Development and Compensation Committee of our Board of Directors (MDCC) and are compensatory in nature. These
awards vest over a specified period of time as determined by the MDCC, generally four years for employee awards and
one year for nonemployee directors. Restricted stock awards entitle the recipient to full dividend and voting rights
beginning on the date of grant. Non-vested shares are restricted as to disposition and subject to forfeiture under certain
circumstances. At the date of award each share of restricted stock is credited to common stock at par value. The fair value
of restricted stock, calculated under the intrinsic value method at the date of award, is charged to income as
compensation expense over the vesting period with a corresponding credit to additional paid-in capital.
No further grants are allowed under the 2001 Stock Plan or the 1997 Nonemployee Directors Restricted Stock Plan after
January 30, 2011 and November 25, 2011, respectively.
Restricted stock activity was as follows:
(Share amounts in thousands) Shares
Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 2006 5,128 $41.31
Granted 1,884 53.66
Vested (1,222) 37.55
Forfeited (539) 42.84
Outstanding at December 31, 2007 5,251 46.45
Granted 1,725 63.00
Vested (1,703) 41.78
Forfeited (281) 49.29
Outstanding at December 31, 2008 4,992 53.60
Granted 2,514 44.83
Vested (1,666) 46.57
Forfeited (247) 53.10
Outstanding at December 31, 2009 5,593 $51.78
Long-Term Performance Plan
In 2004, we established the LTPP, which provides for restricted stock unit awards granted from the 2001 Stock Plan to
our senior leadership. These awards vest at the end of a three-year performance cycle based upon the achievement of
specific pre-established levels of performance.
The performance goals for the three outstanding performance cycles at December 31, 2009, which are independent of
each other, are based on three metrics as defined in the award agreements: return on invested capital (ROIC), weighted at
50%, total shareholder return (TSR) relative to a peer group , weighted at 25%; and cumulative free cash flow (CFCF),
weighted at 25%.
The ultimate award, which is determined at the end of each of the three-year performance cycles, can range from zero to
200% of the target award and also includes dividend equivalents, which are not included in the table below.
Compensation expense for the awards is recognized over the performance period based upon the value determined under
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