We can use existing shares bought in the market, treasury shares or newly-issued shares to satisfy awards under the company’s various stock plans.
For restricted stock awards under the long-term incentive plan and matching share awards under the annual bonus share matching plan, we would normally expect to use existing shares.
There are limits on the amount of new-issue equity we can use. In any rolling ten-year period, no more than 10% of Pearson equity will be issued, or be capable of being issued, under all Pearson’s share plans, and no more than 5% of Pearson equity will be issued, or be capable of being issued, under executive or discretionary plans.
At 31 December 2010, stock awards to be satisfied by new-issue equity granted in the last ten years under all Pearson share plans amounted to 2.4% of the company’s issued share capital and under executive or discretionary share plans amounted to 0.9%.
In addition, for existing shares no more than 5% of Pearson equity may be held in trust at any time. Against this limit, shares held in trust at 31 December 2010 amounted to 1.7% of the company’s issued share capital.
The headroom available for all Pearson plans, executive or discretionary plans and shares held in trust is as follows:
| Headroom | 2010 | 2009 | 2008 |
|---|---|---|---|
| All Pearson plans | 7.6% | 6.4% | 6.2% |
| Executive or discretionary plans | 4.1% | 3.0% | 2.8% |
| Shares held in trust | 3.3% | 3.3% | 3.3% |