IBM 2011 Annual Report Download - page 122

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies120
Stock Awards
In lieu of stock options, the company currently grants its employees stock awards. These awards are made in the form of Restricted Stock
Units (RSUs), including Retention Restricted Stock Units (RRSUs) or Performance Share Units (PSUs).
The tables below summarize RSU and PSU activity under the Plans during the years ended December 31, 2011, 2010 and 2009.
RSUs
2011 2010 2009
Weighted
Average
Grant Price
Number
of Units
Weighted
Average
Grant Price
Number
of Units
Weighted
Average
Grant Price
Number
of Units
Balance at January 1 $110 11,196,446 $102 13,405,654 $100 12,397,515
RSUs granted 154 5,196,802 122 3,459,303 105 4,432,449
RSUs released 106 (3,508,700) 98 (5,102,951)99 (2,748,613)
RSUs canceled/forfeited 122 (665,947) 105 (565,560)101 (675,697)
Balance at December 31 $129 12,218,601 $110 11,196,446 $102 13,405,654
PSUs
2011 2010 2009
Weighted
Average
Grant Price
Number
of Units
Weighted
Average
Grant Price
Number
of Units
Weighted
Average
Grant Price
Number
of Units
Balance at January 1 $111 3,649,288 $107 3,476,737 $102 3,078,694
PSUs granted at target 154 1,055,687 117 1,239,468 101 1,568,129
Additional shares earned above target* 118 230,524 103 463,913 83 396,794
PSUs released 118 (1,189,765) 103 (1,486,484)83 (1,440,099)
PSUs canceled/forfeited 118 (58,743) 108 (44,346)111 (126,781)
Balance at December 31** $122 3,686,991 $111 3,649,288 $107 3,476,737
* Represents additional shares issued to employees after vesting of PSUs because final performance metrics exceeded specified targets.
** Represents the number of shares expected to be issued based on achievement of grant date performance targets. The actual number of shares issued depends on the company’s
performance against specified targets over the vesting period.
unrecognized compensation cost related to non-vested RSUs. The
company received no cash from employees as a result of employee
vesting and release of RSUs for the years ended December 31, 2011,
2010 and 2009. In the second quarter of 2011, the company granted
equity awards valued at approximately $1 thousand each to about
400,000 non-executive employees. These awards were made under
the Plans and vest in December 2015.
PSUs are stock awards where the number of shares ultimately
received by the employee depends on the company’s performance
against specified targets and typically vest over a three-year period.
The fair value of each PSU is determined on the grant date, based
on the company’s stock price, and assumes that performance
targets will be achieved. Over the performance period, the number
of shares of stock that will be issued is adjusted upward or downward
based upon the probability of achievement of performance targets.
The ultimate number of shares issued and the related compensation
cost recognized as expense will be based on a comparison of the
final performance metrics to the specified targets. The fair value of
PSUs granted at target during the years ended December 31, 2011,
2010 and 2009 was $165 million, $145 million and $159 million,
respectively. Total fair value of PSUs vested and released during
the years ended December 31, 2011, 2010 and 2009 was $141 million,
$153 million and $120 million, respectively.
RSUs are stock awards granted to employees that entitle the holder
to shares of common stock as the award vests, typically over a
one- to five-year period. The fair value of the awards is determined
and fixed on the grant date based on the company’s stock price.
RSUs granted to employees prior to January 1, 2008 are considered
participating securities as they receive non-forfeitable dividend
equivalents at the same rate as common stock. Any unvested awards
that contain these rights are included in computing earnings per
share pursuant to the two-class method. For RSUs awarded on or
after January 1, 2008, dividend equivalents are not paid. The fair
value of such RSUs is determined and fixed on the grant date based
on the company’s stock price adjusted for the exclusion of dividend
equivalents.
The remaining weighted-average contractual term of RSUs at
December 31, 2011, 2010 and 2009 is the same as the period over
which the remaining cost of the awards will be recognized, which
is approximately three years. The fair value of RSUs granted during
the years ended December 31, 2011, 2010 and 2009 was $803 million,
$421 million and $467 million, respectively. The total fair value of RSUs
vested and released during the years ended December 31, 2011,
2010 and 2009 was $373 million, $503 million and $272 million,
respectively. As of December 31, 2011, 2010 and 2009, there was
$1,021 million, $865 million and $892 million, respectively, of