Nike 2012 Annual Report Download - page 57

PART II
The Company has recorded deferred tax assets of $216 million at May 31, 2012 for foreign tax credit carry-forwards with expiration dates between 2020 and
2022.
The Company has available domestic and foreign loss carry-forwards of $247 million at May 31, 2012. Such losses, if not utilized, will expire as follows:
Year Ending May 31,
(In millions) 2013 2014 2015 2016 2017- 2032 Indefinite Total
Net Operating Losses $ — 8 3 8 131 97 $ 247
During the years ended May 31, 2012, 2011, and 2010, income tax benefits attributable to employee stock-based compensation transactions of $120 million,
$68 million, and $57 million, respectively, were allocated to shareholders’ equity.
NOTE 10 — Redeemable Preferred Stock
Sojitz America is the sole owner of the Company’s authorized Redeemable
Preferred Stock, $1 par value, which is redeemable at the option of Sojitz
America or the Company at par value aggregating $0.3 million. A cumulative
dividend of $0.10 per share is payable annually on May 31 and no dividends
may be declared or paid on the common stock of the Company unless
dividends on the Redeemable Preferred Stock have been declared and paid
in full. There have been no changes in the Redeemable Preferred Stock in the
three years ended May 31, 2012, 2011, and 2010. As the holder of the
Redeemable Preferred Stock, Sojitz America does not have general voting
rights but does have the right to vote as a separate class on the sale of all or
substantially all of the assets of the Company and its subsidiaries, on merger,
consolidation, liquidation or dissolution of the Company or on the sale or
assignment of the NIKE trademark for athletic footwear sold in the United
States.
NOTE 11 — Common Stock and Stock-Based Compensation
The authorized number of shares of Class A Common Stock, no par value,
and Class B Common Stock, no par value, are 175 million and 750 million,
respectively. Each share of Class A Common Stock is convertible into one
share of Class B Common Stock. Voting rights of Class B Common Stock are
limited in certain circumstances with respect to the election of directors. There
are no differences in the dividend and liquidation preferences or participation
rights of the Class A and Class B common stockholders.
In 1990, the Board of Directors adopted, and the shareholders approved, the
NIKE, Inc. 1990 Stock Incentive Plan (the “1990 Plan”). The 1990 Plan
provides for the issuance of up to 163 million previously unissued shares of
Class B Common Stock in connection with stock options and other awards
granted under the plan. The 1990 Plan authorizes the grant of non-statutory
stock options, incentive stock options, stock appreciation rights, restricted
stock, restricted stock units, and performance-based awards. The exercise
price for stock options and stock appreciation rights may not be less than the
fair market value of the underlying shares on the date of grant. A committee of
the Board of Directors administers the 1990 Plan. The committee has the
authority to determine the employees to whom awards will be made, the
amount of the awards, and the other terms and conditions of the awards.
Substantially all stock option grants outstanding under the 1990 Plan were
granted in the first quarter of each fiscal year, vest ratably over four years, and
expire 10 years from the date of grant.
The following table summarizes the Company’s total stock-based compensation expense recognized in selling and administrative expense:
Year Ended May 31,
(In millions) 2012 2011 2010
Stock options(1) $ 96 $ 77 $ 135
ESPPs 16 14 14
Restricted stock 18 14 10
TOTAL STOCK-BASED COMPENSATION EXPENSE $ 130 $ 105 $ 159
(1) Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option
vesting upon retirement. In the first quarter of fiscal 2011, the Company changed the accelerated vesting provisions of its stock option plan. Under the new provisions, accelerated stock
option expense for years ended May 31, 2012 and 2011 was $17 million and $12 million, respectively. The accelerated stock option expense for the year ended May 31, 2010 was $74
million.
As of May 31, 2012, the Company had $151 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized as
selling and administrative expense over a weighted average period of 2.2 years.
NIKE, INC. Š2012 Form 10-K 57