Morgan Stanley 2009 Annual Report Download - page 205

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
18. Employee Stock-Based Compensation Plans.
The accounting guidance for stock-based compensation requires measurement of compensation cost for equity-
based awards at fair value and recognition of compensation cost over the service period, net of estimated
forfeitures (see Note 2).
The components of the Company’s stock-based compensation expense (net of cancellations) are presented below:
2009
Fiscal
2008
Fiscal
2007
One Month
Ended
December 31,
2008
(dollars in millions)
Deferred stock ............................................. $1,120 $1,659 $1,580 $ 66
Stock options .............................................. 17 83 240 5
Employee Stock Purchase Plan(1) .............................. 4 10 9 —
Total(2) .............................................. $1,141 $1,752 $1,829 $ 71
(1) The Company discontinued the Employee Stock Purchase Plan effective June 1, 2009.
(2) Amounts for 2009 include $198 million primarily related to equity awards that were granted in 2010 to employees who are retirement-
eligible under the award terms. Amounts for fiscal 2008 and fiscal 2007 include $90 million and $345 million of accrued stock-based
compensation expense primarily related to year-end equity awards granted in December 2008 and December 2007, respectively, to
employees who are retirement-eligible under the award terms. Amounts for the one month ended December 31, 2008 include $2 million
primarily related to equity awards that were granted in 2010 to employees who are retirement-eligible under the award terms.
The table above excludes stock-based compensation expense recorded in discontinued operations, which was
approximately $11 million, $40 million, $30 million and $2 million for 2009, fiscal 2008, fiscal 2007 and the one
month ended December 31, 2008, respectively. See Note 23 for additional information on discontinued
operations.
The tax benefit for stock-based compensation expense related to deferred stock and stock options was $380
million, $557 million, $716 million and $23 million for 2009, fiscal 2008, fiscal 2007 and the one month ended
December 31, 2008, respectively. The tax benefit for stock-based compensation expense included in discontinued
operations in 2009, fiscal 2008, fiscal 2007 and the one month ended December 31, 2008 was approximately
$3 million, $15 million, $12 million, and $1 million, respectively.
As of December 31, 2009 and December 31, 2008, the Company had approximately $762 million and $1,689
million, respectively, of unrecognized compensation cost related to unvested stock-based awards (excluding 2009
year-end awards granted in January 2010 to nonretirement-eligible employees, which will begin to be amortized
in 2010). The unrecognized compensation cost relating to unvested stock-based awards expected to vest will
primarily be recognized over the next two years.
In connection with awards under its equity-based compensation plans, the Company is authorized to issue shares
of its common stock held in treasury or newly issued shares. As of December 31, 2009 and December 31, 2008,
approximately 107 million and 82 million shares, respectively, were available for future grant under these plans.
The Company generally uses treasury shares to deliver shares to employees and has an ongoing repurchase
authorization that includes repurchases in connection with awards granted under its equity-based compensation
plans. Share repurchases by the Company are subject to regulatory approval. See Note 13 for additional
information on the Company’s share repurchase program.
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