Macy's 2009 Annual Report Download - page 90

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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 accumulated
postretirement benefit obligations:
(millions)
Fiscal year:
2010 ......................................................... $ 29
2011 ......................................................... 29
2012 ......................................................... 28
2013 ......................................................... 27
2014 ......................................................... 26
2015-2019 ..................................................... 112
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 2010, 2011,
2012 and 2013, $1 million in 2014 and $6 million for the period 2015 to 2019.
16. Stock Based Compensation
During 2009, the Company obtained shareholder approval for the Macy’s 2009 Omnibus Incentive
Compensation Plan under which up to fifty-one million shares of Common Stock may be issued. This plan is
intended to help the Company attract and retain directors, officers, other key executives and employees and is
also intended to provide incentives and rewards relating to the Company’s business plans to encourage such
persons to devote themselves to the business of the Company. Prior to 2009, the Company had two equity
plans. As of the date of the Merger, the Company assumed May’s equity plan, which was subsequently 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 prior to 2009 on a combined basis. The equity plan is 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 of the
performance period until such stock credit is settled in cash. The total remaining stock credit awards outstanding
as of January 31, 2009, including reinvested dividend equivalents earned during the holding period, relating to
the 2004 grant 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 1,451,889
stock credit awards outstanding as of January 30, 2010, 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 was 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 1,815,466 stock credit awards
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