Macy's 2012 Annual Report Download - page 85

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-38
Additional information relating to stock options is as follows:
2012 2011 2010
(millions)
Intrinsic value of options exercised ................................................................................. $ 132 $ 64 $ 13
Grant date fair value of stock options that vested during the year................................... 30 50 55
Cash received from stock options exercised.................................................................... 164 141 39
Excess tax benefits realized from exercised stock options.............................................. 36 20 4
Stock Credits
The Company also has a stock credit plan. In 2006, key management personnel became eligible to earn a stock credit
grant over a two-year performance period ending February 2, 2008. 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 was 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 836,268 stock credit awards outstanding as of February 2, 2013, relating
to the 2008 grant. In general, with respect to the stock credits awarded to participants in 2008, the value of one-half of the stock
credits earned plus reinvested dividend equivalents was paid in cash in early 2012 and amounted to $28 million and the value of
the other half of such earned stock credits plus reinvested dividend equivalents was paid in cash in early 2013 and amounted to
$32 million. Compensation expense for stock credit awards is recorded on a straight-line basis primarily over the vesting period
and is calculated based on the ending stock price for each reporting period. At February 2, 2013 and January 28, 2012, the
liability under the stock credit plans, which is reflected in accounts payable and accrued liabilities and other liabilities on the
Consolidated Balance Sheets, was $32 million and $55 million, respectively.
Activity related to stock credits for 2012 is as follows:
Shares
(thousands)
Stock credits, beginning of period...................................................................................................................... 1,649.9
Additional dividend equivalents earned ............................................................................................................. 17.2
Stock credits forfeited......................................................................................................................................... —
Stock credits distributed ..................................................................................................................................... (830.8)
Stock credits, end of period ................................................................................................................................ 836.3
Restricted Stock and Restricted Stock Units
The weighted average grant date fair value of restricted stock and restricted stock units granted during 2012, 2011 and
2010 are as follows:
2012 2011 2010
Restricted stock.............................................................................................. $ — $ 23.43 $ 20.89
Restricted stock units..................................................................................... $ 39.52 $ 23.69 $ 20.95
The fair value of the Target Shares and restricted stock awards are based on the fair value of the underlying shares on the
date of grant. The fair value of the portion of the Target Shares granted in 2012 that relate to a relative TSR performance
objective was determined using a Monte Carlo simulation analysis to estimate the total shareholder return ranking of the
Company among a ten-company executive compensation peer group over the remaining performance period. The expected
volatility of the Company’s common stock at the date of grant was estimated based on a historical average volatility rate for the
approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend
payouts. The risk-free interest rate assumption was based on observed interest rates consistent with the approximate three-year
performance measurement period.