Nordstrom 2011 Annual Report Download - page 58

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Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
As of January 28, 2012, we have 14.1 options outstanding under the 2010 Plan. Options vest over four years, and expire ten years after the date of
grant. A summary of the stock option activity for 2011 is presented below:
Fiscal year 2011
Shares
Weighted-
average
exercise price
Weighted-average
remaining contractual
life (years)
Aggregate
intrinsic
value
Outstanding, beginning of year 14.7
$27
Granted 2.7
45
Exercised (3.0)
21
Cancelled (0.3)
35
Expired -
9
Outstanding, end of year 14.1
$32
6 $240
Options exercisable at end of year 7.0
$31
5 $129
Options vested or expected to vest at end of year 13.1
$32
6 $226
The total intrinsic value of options exercised during 2011, 2010 and 2009 was $80, $51 and $23. The total fair value of stock options vested during 2011,
2010 and 2009 was $29, $27 and $25. As of January 28, 2012, the total unrecognized stock-based compensation expense related to nonvested stock
options was $39, which is expected to be recognized over a weighted-average period of 28 months.
HauteLook
As discussed in Note 2: HauteLook, consideration for our acquisition of HauteLook payable in Nordstrom stock includes ongoing vesting
requirements for HauteLook’s employees. These amounts are recorded as compensation expense as the related service is performed over the
respective employee vesting periods of up to four years after the acquisition date.
A summary of the nonvested restricted stock award activity related to HauteLook for 2011 is as follows:
Fiscal year 2011
Shares
Weighted-
average grant-
date fair value
Outstanding, beginning of year
- -
Granted 1.2
$42
Vested (0.2)
42
Forfeited1
(0.2) 42
Outstanding, end of year 0.8
$42
1Includes 0.2 of restricted stock units related to the HauteLook acquisition that were cancelled in connection with the HauteLook acquisition amendment.
The total fair value of restricted stock vested during 2011 was $10. As of January 28, 2012, the total unrecognized stock-based compensation expense
related to HauteLook nonvested restricted stock awards was $19, which is expected to be recognized over a weighted-average period of 14 months.
Performance Share Units
We grant performance share units to executive officers as one of the ways to align compensation with shareholder interests. Performance share
units vest after a three-year period only when our total shareholder return (reflecting daily stock price appreciation and compounded reinvestment
of dividends) is positive and outperforms companies in a defined group of competitors determined by the Compensation Committee of our Board of
Directors. The percentage of units that are earned depends on our relative position at the end of the vesting period and can range from 0% to 125%
of the number of units granted.
Performance share units are payable in either cash or stock as elected by the employee; therefore, they are classified as a liability award. The
liability is remeasured, with a corresponding adjustment to earnings, at each fiscal quarter-end during the vesting period. The performance share
unit liability is remeasured using the estimated percentage of units earned multiplied by the closing market price of our common stock on the
current period-end date and is pro-rated based on the amount of time passed in the vesting period. The price used to issue stock or cash for the
performance share units upon vesting is the closing market price of our common stock on the vest date.