McKesson 2012 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2012 McKesson annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
70
The following table provides data related to stock option activity:
Years Ended March 31,
(In millions, except per share data and years) 2012 2011 2010
Weighted-average grant date fair value per stock option $ 20.32 $ 18.37 $ 12.56
Aggregate intrinsic value on exercise $ 108 $ 276 $ 115
Cash received upon exercise $ 113 $ 319 $ 165
Tax benefits realized related to exercise $ 40 $ 106 $ 37
Total fair value of stock options vested $ 23 $ 21 $ 16
Total compensation cost, net of estimated forfeitures,
related to unvested stock options not yet recognized,
pre-tax $ 40 $ 41 $ 37
Weighted-average period in years over which stock
option compensation cost is expected to be recognized 1 1 1
RSUs and PeRSUs
RSUs, which entitle the holder to receive at the end of a vesting term a specified number of shares of the
Company’s common stock, are accounted for at fair value at the date of grant. Total compensation expense for
RSUs under our stock plans is determined by the product of the number of shares that are expected to vest and the
grant date market price of the Company’s common stock. The Compensation Committee determines the vesting
terms at the time of grant. These awards generally vest in three to four years. We recognize expense for RSUs with
a single vest date on a straight-line basis over the requisite service period. We have elected to expense the grant date
fair value of RSUs with only graded vesting and service conditions on a straight-line basis over the requisite service
period.
Non-employee directors receive an annual grant of RSUs, which vest immediately and are expensed upon grant.
The director may choose to receive payment immediately or defer receipt of the underlying shares if they meet
director stock ownership guidelines. At March 31, 2012, 128,000 RSUs for our directors are vested, but shares have
not been issued.
PeRSUs are RSUs for which the number of RSUs awarded may be conditional upon the attainment of one or
more performance objectives over a specified period. PeRSUs are accounted for as variable awards until the
performance goals are reached and the grant date is established. Total compensation expense for PeRSUs is
determined by the product of the number of shares eligible to be awarded and expected to vest, and the market price
of the Company’s common stock, commencing at the inception of the requisite service period. During the
performance period, the compensation expense for PeRSUs is re-computed using the market price and the
performance modifier at the end of a reporting period. At the end of the performance period, if the goals are
attained, the awards are granted and classified as RSUs and accounted for on that basis. For PeRSUs granted during
or prior to 2009, for which the related RSU grant has multiple vesting dates, we recognize the compensation expense
of these awards on a graded vesting basis over the requisite aggregate service period of four years. For PeRSUs
granted during or after 2009, for which the related RSU has a single vesting date, we recognize compensation
expense of these awards on a straight-line basis over the requisite aggregate service period of four years.