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134 Ford Motor Company | 2012 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 22. SHARE-BASED COMPENSATION (Continued)
We grant performance-based and time-based RSUs to our employees. RSUs provide the recipients with the right to
shares of Common Stock after a restriction period. We measure the fair value using the closing price of our Common
Stock on grant date. Expenses associated with RSUs are recorded in Selling, administrative, and other expense.
Time-based RSUs generally have a graded vesting feature whereby one-third of each grant of RSUs vests after the
first anniversary of the grant date, one-third after the second anniversary, and one-third after the third anniversary.
Expense is recognized using the graded vesting method and is based on the fair value at grant date.
Performance-based RSUs have a performance period (usually one year) followed by a restriction period (usually two
years). Compensation expense for performance-based RSUs is recognized when it is probable and estimable as
measured against the performance metrics. Expense is recognized over the performance and restriction periods, if any,
and is based on the fair value at grant date.
We also grant stock options to our employees. We measure the fair value of our stock options using the Black-
Scholes option-pricing model, using historical volatility and our determination of the expected term. The expected term of
stock options is the time period that the stock options are expected to be outstanding. Historical data are used to estimate
option exercise behaviors and employee termination experience.
Stock options generally have a vesting feature whereby one-third of each grant of stock options are exercisable after
the first anniversary of the grant date, one-third after the second anniversary, and one-third after the third anniversary.
Stock options expire 10 years from the grant date and are expensed in Selling, administrative, and other expenses using
a three-year graded vesting methodology.
We issue new shares of Common Stock upon vesting of RSUs and upon exercise of stock options.
Restricted Stock Units
RSU activity during 2012 was as follows:
Shares
(millions)
Weighted-
Average Grant-
Date Fair Value
Aggregate
Intrinsic Value
(millions)
Outstanding, beginning of year 36.1 $7.31
Granted 8.2 12.43
Vested (25.4)4.28
Forfeited (0.7)14.12
Outstanding, end of year 18.2 13.18 $ 235.7
RSU-stock expected to vest 18.0 N/A 232.6
Intrinsic value of RSUs is measured by applying the closing stock price as of December 31 to the applicable number
of units. The fair value and intrinsic value of RSUs during 2012, 2011, and 2010 were as follows (in millions, except RSU
per unit amounts):
2012 2011 2010
Fair value
Granted $ 102 $123 $130
Weighted average for multiple grant dates (per unit) 12.43 14.47 12.69
Vested 109 141 112
Intrinsic value
Vested 329 478 522