Comcast 2007 Annual Report Download - page 62

Note 11: Share-Based Compensation
Our Board of Directors may grant share-based awards, in the form
of stock options and RSUs, to certain employees and directors.
Employees are also offered the opportunity to purchase shares of
Comcast stock at a discount through payroll deductions as part of
our Employee Stock Purchase Plan.
Compensation expense recognized related to stock option awards,
RSU awards and employee participation in the Employee Stock Pur-
chase Plan are summarized in the table below:
Year ended December 31 (in millions) 2007 2006 2005(a)
Stock options $74 $ 120 $ 10
Restricted share units 79 62 57
Employee stock purchase plan 11 8—
Total share-based compensation
expense $ 164 $ 190 $ 67
Tax benefit $56 $66 $25
(a) Amounts reflect expense prior to the adoption of SFAS No. 123R.
As of December 31, 2007, there was unrecognized pretax com-
pensation expense of $259 million and $251 million related to
nonvested stock options and nonvested RSUs that will be recog-
nized over a weighted average period of approximately two and
one half years. The amount of share-based compensation cap-
italized or related to discontinued operations was not material to
our consolidated financial statements.
Any tax benefits realized upon the exercise of stock options or the
issuance of RSU awards in excess of that which is associated with
the expense recognized for financial reporting purposes are pre-
sented as a financing activity rather than as an operating activity in
our consolidated statement of cash flows. The excess cash tax
benefit classified as a financing cash inflow for each of the years
ended December 31, 2007 and 2006 was $33 million.
In connection with the Stock Split, all outstanding share-based
awards were modified as required under the terms of our equity
plans. This modification did not change the fair value of out-
standing awards. Before this modification, compensation costs
related to awards granted before the adoption of SFAS No. 123R
were recognized under an accelerated recognition method. As a
result of the Stock Split modification, the remaining unrecognized
compensation costs related to all awards are recognized on a
straight-line basis over the remaining requisite service period. The
impact of this change was not material to our consolidated finan-
cial statements.
Before January 1, 2006, we accounted for our share-based
compensation plans in accordance with the provisions of APB
No. 25, as permitted by SFAS No. 123, and accordingly did not
recognize compensation expense for stock options with an exer-
cise price equal to or greater than the market price of the under-
lying stock at the date of grant. Had the fair-value-based method
as prescribed by SFAS No. 123 been applied, additional pretax
compensation expense of $166 million would have been recog-
nized for the year ended December 31, 2005. The pretax com-
pensation expense includes the expense related to discontinued
operations, which for the year ended December 31, 2005 was $4
million. Had the fair-value-based method as prescribed by SFAS
No. 123 been applied, the effect on net income and earnings per
share would have been as follows:
(in millions, except per share data) 2005
Net income, as reported $ 928
Add: Share-based compensation expense included
in net income, as reported above, net of related
tax effects 42
Less: Share-based compensation expense determined
under fair-value-based method for all awards, net of
related tax effects (150)
Pro forma, net income $ 820
Basic earnings per common share:
As reported $ 0.28
Pro forma $ 0.25
Diluted earnings per common share:
As reported $ 0.28
Pro forma $ 0.25
Comcast 2007 Annual Report on Form 10-K 60