Macy's 2011 Annual Report Download - page 75

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-35
granted under the Macy's 1995 Executive Equity Incentive Plan or the Macy's 1994 Stock Incentive Plan. The following
disclosures present the Company’s equity plans 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. Restricted stock and time-
based restricted stock unit awards generally vest one to four years from the date of grant. Performance-based restricted stock
units vest based on the results attained during the performance period.
As of January 28, 2012, 36.6 million shares of common stock were available for additional grants pursuant to the
Company’s equity plan. Shares awarded are generally issued from the Company's treasury stock.
Stock-based compensation expense included the following components:
2011 2010 2009
(millions)
Stock options........................................................................................ $ 28 $ 34 $ 43
Stock credits......................................................................................... 20 19 26
Restricted stock.................................................................................... 2 2 3
Restricted stock units........................................................................... 20 11 4
$ 70 $ 66 $ 76
All stock-based compensation expense is recorded in SG&A expense in the Consolidated Statements of Income. The
income tax benefit recognized in the Consolidated Statements of Income related to stock-based compensation was
approximately $25 million, approximately $24 million, and approximately $28 million, for 2011, 2010 and 2009, respectively.
During 2011 and 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 three-year performance periods ending February 1, 2014
and February 2, 2013, respectively. 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. The performance
objectives include achieving a cumulative EBITDA level for the performance period and also 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
periods, 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 2011 and 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 were earned upon the completion of the three-year
performance period ended January 28, 2012 as 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
reflected 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. Because the Company’s TSR for the performance period was above the 66th percentile for the peer
group, 100% of the award opportunity had been earned.