Macy's 2008 Annual Report Download - page 89

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following benefit payments are estimated to be funded by the Company and paid from the
postretirement obligations:
(millions)
Fiscal year:
2009 ......................................................... $ 37
2010 ......................................................... 30
2011 ......................................................... 30
2012 ......................................................... 29
2013 ......................................................... 28
2014-2018 ..................................................... 125
The estimated benefit payments reflect estimated federal subsidies expected to be received under the
Medicare Prescription Drug, Improvement and Modernization Act of 2003 of $2 million in each of 2009, 2010,
2011, 2012 and 2013 and $7 million for the period 2014 to 2018.
16. Stock Based Compensation
The Company has equity plans intended to provide an equity interest in the Company to key management
personnel and thereby provide additional incentives for such persons to devote themselves to the maximum
extent practicable to the businesses of the Company and its subsidiaries. As of the date of the Merger, the
Company assumed May’s equity plan, which has since been amended to have identical terms and provisions of
the Company’s other equity plan. At the date of the Merger, all outstanding May options under May’s equity plan
were fully vested and were converted into options to acquire common stock of the Company in accordance with
the Merger agreement. The following disclosures present the Company’s equity plans on a combined basis. The
equity plans are administered by the Compensation and Management Development Committee of the Board of
Directors (the “CMD Committee”). The CMD Committee is authorized to grant options, stock appreciation
rights, restricted stock and restricted stock units to officers and key employees of the Company and its
subsidiaries and to non-employee directors. Stock option grants have an exercise price at least equal to the
market value of the underlying common stock on the date of grant, have ten-year terms and typically vest ratably
over four years of continued employment.
The Company also has a stock credit plan. Beginning in 2004, key management personnel became eligible
to earn a stock credit grant over a two-year performance period ended January 28, 2006. In general, each stock
credit is intended to represent the right to receive the value associated with one share of the Company’s common
stock, including dividends paid on shares of the Company’s common stock during the period from the end the
performance period until such stock credit is settled in cash. There were a total of 404,227 stock credit awards
outstanding as of January 31, 2009, including reinvested dividend equivalents earned during the holding period,
relating to the 2004 grant. The value of one-half of the stock credits awarded to participants in 2004 was paid in
cash in early 2008 and the value of the remaining stock credits was paid in cash in early 2009. In 2006, key
management personnel became eligible to earn a stock credit grant over a two-year performance period ending
February 2, 2008. There were a total of 1,427,813 stock credit awards outstanding as of January 31, 2009,
including reinvested dividend equivalents earned during the holding period, relating to the 2006 grant. In general,
with respect to the stock credits awarded to participants in 2006, the value of one-half of the stock credits earned
plus reinvested dividend equivalents will be paid in cash in early 2010 and the value of the other half of such
earned stock credits plus reinvested dividend equivalents will be paid in cash in early 2011. In 2008, key
management personnel became eligible to earn a stock credit grant over a two-year performance period ending
January 30, 2010. There were a total of 1,898,763 stock credit awards outstanding as of January 31, 2009,
relating to the 2008 grant. In general, with respect to the stock credits awarded to participants in 2008, the value
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