Macy's 2010 Annual Report Download - page 90

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Stock-based compensation expense included the following components:
2010 2009 2008
(millions)
Stock options ..................................................... $34 $43 $55
Stock credits ..................................................... 19 26 (18)
Restricted stock ................................................... 2 3 6
Restricted stock units .............................................. 11 4 –
$66 $76 $ 43
All stock-based compensation expense is recorded in SG&A expense in the Consolidated Statements of
Operations. Stock-based compensation expense for 2008 included a credit, reflecting a decrease in the stock price
used to calculate the settlement amount of stock credits. The income tax benefit recognized in the Consolidated
Statements of Operations related to stock-based compensation was approximately $24 million, approximately
$28 million, and approximately $16 million, for 2010, 2009 and 2008, respectively.
During 2010, the CMD Committee approved awards of performance-based restricted stock units to certain
senior executives of the Company. Each award reflects a target number of shares (“Target Shares”) that may be
issued to the award recipient. These awards may be earned upon the completion of a three-year performance
period ending February 2, 2013. Whether units are earned at the end of the performance period will be
determined based on the achievement of certain performance objectives set by the CMD Committee in
connection with the issuance of the units. The performance objectives are based on the Company’s business plan
covering the performance period and include an EBITDA as a percent to sales ratio and a return on invested
capital ratio. Depending on the results achieved during the three-year performance period, the actual number of
shares that a grant recipient receives at the end of the period may range from 0% to 150% of the Target Shares
granted.
Also during 2010, the CMD Committee approved awards of time-based restricted stock to certain senior
executives of the Company and awards of time-based restricted stock units to the non-employee members of the
Company’s board of directors.
During 2009, the CMD Committee approved awards of performance-based restricted stock units to certain
senior executives of the Company (the “Founders Awards”). The Founders Awards may be earned upon the
completion of a three-year performance period ending January 28, 2012. Whether units are earned at the end of
the performance period will be determined based on the achievement of relative total shareholder return (“TSR”)
performance objectives set by the CMD Committee in connection with the issuance of the units. Relative TSR
reflects the change in the value of the Company’s common stock over the performance period in relation to the
change in the value of the common stock of a ten-company executive compensation peer group over the
performance period, assuming the reinvestment of dividends. If the Company’s TSR for the performance period
is equal to or less than the median TSR for the peer group, the entire Founders Award opportunity will be
forfeited. If the Company’s TSR for the performance period is above the median but equal to or below the 66th
percentile for the peer group, 75% of the award opportunity will vest. If the Company’s TSR for the performance
period is above the 66th percentile for the peer group, 100% of the award opportunity will vest.
F-42