ManpowerGroup 2007 Annual Report Download - page 47

44 Manpower 2007 Annual Report Notes to Consolidated Financial Statements
Notes To Consolidated Financial Statements
in millions, except per share data
03.
Stock Compensation Plans
We adopted Statement of Financial Accounting Standards SFAS No. 123(R), “Share-Based Payment” (“SFAS 123R”), effective
January 1, 2006, using the modifi ed prospective application transition method. The modifi ed prospective application transition
method requires compensation cost to be recognized beginning on the effective date (a) based on the requirements of SFAS
123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all
awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date. As such, prior
periods do not refl ect restated amounts. Prior to January 1, 2006, we accounted for all of our fi xed stock option plans and our
1990 Employee Stock Purchase Plan in accordance with APB Opinion No. 25, ”Accounting for Stock Issued to Employees,”
and related Interpretations. No stock-based employee compensation expense related to stock options or our stock purchase
plans was refl ected in Net Earnings prior to January 1, 2006. SFAS 123R requires us to report the tax benefi t from the tax
deduction that is in excess of the recognized compensation costs (excess tax benefi ts) as a fi nancing cash fl ow. Prior to
January 1, 2006, we reported the entire tax benefi t related to the exercise of stock options as an operating cash fl ow.
During 2007 and 2006, we recognized approximately $26.0 and $22.5, respectively, in share-based compensation expense
related to stock options, deferred stock, restricted stock, and the stock purchase plan, all of which is recorded in Selling and
Administrative Expenses. The total income tax benefi t recognized related to share-based compensation during 2007 and 2006
was $3.3 and $3.0, respectively. Cash received from stock option exercises for 2007 and 2006 was $35.0 and $54.0, respectively.
The excess income tax benefi t recognized related to share-based compensation awards, which is recorded in Capital in
Excess of Par Value, for 2007 and 2006 was approximately $5.3 and $8.2, respectively. We recognize compensation expense
on grants of share-based compensation awards on a straight-line basis over the service period of each award recipient.
The following table illustrates the effect on Net Earnings and Net Earnings Per Share had we applied the fair value recognition
provisions of SFAS 123R to share-based employee compensation for periods prior to its adoption:
Year Ended December 31 2005
Net Earnings from Continuing Operations
Net earnings from Continuing Operations, as reported $ 255.1
Add: Total share-based employee compensation expense under APB 25,
net of related tax effects(1) 1.1
Less: Total share-based employee compensation expense determined under
the fair value method for all awards, net of related tax effects 11.5
Net earnings from continuing operations, pro forma $ 244.7
Net Earnings Per Share – Continuing Operations
Basic – as reported $ 2.89
Basic – pro forma 2.78
Diluted – as reported 2.81
Diluted – pro forma 2.70
(1) The share-based employee compensation is related to restricted stock and deferred stock.
Stock Options
All share-based compensation is currently granted under our 2003 Equity Incentive Plan of Manpower Inc. (“2003 Plan”).
Options and stock appreciation rights are granted at a price not less than 100% of the fair market value of the common stock at
the date of grant. Generally, options are granted with a vesting period of up to four years and expire ten years from date of grant.
As of December 31, 2007 and 2006, no stock appreciation rights had been granted or were outstanding.