PDF Version

The stock awards generally entitle holders to the right to sell the underlying shares of the Company’scommon stock once the awards vest. Stock unit awards generally entitle holders to receive the underlyingshares of common stock once the awards vest. In addition, certain performance-based stock awards havebeen granted to the Chief Executive Officer. The total number of shares ultimately received by the ChiefExecutive Officer depends on the Company’s performance against specified performance goals and issubject to vesting provisions. At September 30, 2009, the balance of nonvested shares granted to the ChiefExecutive Officer and subject to vesting upon the achievement of performance goals, set or determined inprior years, was 12.3 thousand and had a weighted-average grant-date fair value of $121.76 per share.Employee Stock Investment PlanThe amended and restated Franklin Resources, Inc. 1998 Employee Stock Investment Plan (the“ESIP”), allows eligible participants to buy shares of the Company’s common stock at a discount of itsmarket value on defined dates. The Compensation Committee of the Board of Directors determines theterms and conditions of awards under the ESIP. A total of 0.5 million shares were issued under the ESIPduring fiscal year 2009. At September 30, 2009, approximately 3.1 million shares were reserved for futureissuance under this plan.Effective August 1, 2008, the terms of the ESIP were amended to allow eligible participants to buyshares of the Company’s common stock at 85% of its market value on defined dates and the Company’sdiscretionary match was discontinued with respect to shares purchased under the plan on or after such date.All Stock-Based Plan ArrangementsTotal stock-based compensation costs of $84.4 million, $80.7 million and $90.1 million wererecognized in the consolidated statements of income during fiscal years 2009, 2008 and 2007. During fiscalyear 2007, the Company recorded charges to compensation and benefits for the repurchase of stock-basedcompensation awards that previously had been recognized as a charge to capital in excess of par value.The Company generally does not repurchase shares upon share option exercise or vesting of stockawards and stock unit awards. However, in order to pay taxes due in connection with the vesting ofemployee and executive officer stock awards and stock unit awards under the USIP and in connection withthe remaining discretionary matches under the ESIP, shares are repurchased using a net stock issuancemethod.Note 17 – Defined Benefit PlansFranklin Templeton Global Investors Limited, an indirect subsidiary of Franklin located in the UnitedKingdom, sponsors a defined benefit pension plan. In addition, Fiduciary Trust, a wholly-owned subsidiaryof Franklin located in the United States, sponsors a defined benefit healthcare plan that provides postretirementmedical benefits to full-time employees who have worked ten years and attained age 55 while inthe service of Fiduciary Trust, or have met alternate eligibility criteria. The defined benefit healthcare planwas closed to new entrants in April 2003.105