Raytheon 2010 Annual Report Download - page 104

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At December 31, 2010, we had stock-based compensation awards outstanding under a number of stock plans, including
our 2010 Stock Plan. Future grants of awards will be made from the 2010 Stock Plan and not from our prior plans.
Shares issued as a result of stock awards, stock option exercises or conversion of restricted stock unit awards will be
funded through treasury stock or the issuance of new shares. Of the 41.8 million shares authorized under our stock plans,
there were 11.9 million shares available for awards under such plans as of December 31, 2010.
Restricted Stock
The 2010 Stock Plan provides for the award of restricted stock awards, restricted stock units and stock appreciation rights
to our employees, officers, nonemployee directors and consultants. Awards of restricted stock awards, 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.
Restricted stock activity was as follows:
(Share amounts in thousands) Shares
Weighted-Average
Grant Date
Fair Value
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
Granted 1,932 52.37
Vested (1,697) 54.02
Forfeited (385) 51.62
Outstanding at December 31, 2010 5,443 $51.30
Long-Term Performance Plan
In 2004, we established the LTPP, which provides for restricted stock unit awards granted from our stock plans 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, 2010, 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%.
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