McKesson 2009 Annual Report Download - page 87

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
81
Impact on Net Income
The components of share-based compensation expense and the related tax benefit are shown in the following
table:
Years Ended March 31,
(In millions, except per share amounts) 2009 2008 2007
RSUs and RS (1) $ 60 $ 50 $ 22
PeRSUs (2) 13 22 24
Stock options 18 11 7
Employee stock purchase plan 8 8 7
Share-based compensation expense 99 91 60
Tax benefit for share-based compensation expense (3) (34) (31) (20)
Share-based compensation expense, net of tax (4) $ 65 $ 60 $ 40
Impact of share-based compensation:
Earnings per share
Diluted $ 0.23 $ 0.20 $ 0.13
Basic 0.24 0.21 0.13
(1) This expense was primarily the result of PeRSUs awarded in prior years, which converted to RSUs due to the attainment of
goals during the applicable years’ performance period.
(2) Represents estimated compensation expense for PeRSUs that are conditional upon attaining performance objectives during
the current year’s performance period.
(3) Income tax expense is computed based on applicable tax jurisdictions. Additionally, a portion of pre-tax compensation
expense is not tax-deductible.
(4) No material share-based compensation expense was included in Discontinued Operations.
Stock Plans
The 2005 Stock Plan provides our employees, officers and non-employee directors share-based long-term
incentives. The 2005 Stock Plan permits the granting of up to 28 million shares in the form of stock options, RS,
RSUs, PeRSUs and other share-based awards. As of March 31, 2009, 12 million shares remain available for future
grant. As a result of acquisitions, we currently have 2 other option plans under which no further awards have been
made since their respective acquisition dates.
Stock Options
Stock options are granted at no less than fair market value and those options granted under the 2005 Stock Plan
generally have a contractual term of seven years and follow a four-year vesting schedule. Prior to 2005, stock
options typically vested over a four-year period and had a contractual term of ten years. We expect option grants in
2010 and future years will have the same general contractual life and vesting schedule as those options granted
under the 2005 Stock Plan.