Nordstrom 2015 Annual Report Download - page 58

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The following is a summary of performance share unit activity which assumes performance share units vest at 100% of the number of units
granted:
Fiscal year 2015
Outstanding units, beginning of year 0.2
Granted 0.1
Special dividend adjustment —
Vested —
Forfeited or cancelled —
Outstanding units, end of year 0.3
In 2015, the 2012 performance share units earned and vested at 75% was less than 0.1 units and had a total stock and cash settlement of
$3.
As of•January•30, 2016, our current and non-current other liabilities included a total of•$3•for performance share units, and there was no
remaining unrecognized stock-based compensation expense for unvested performance share units.
Employee Stock Purchase Plan
We issued 0.3 shares under the ESPP during 2015 and 2014. At the end of 2015 we had current liabilities of $7 for future purchases of
shares under the ESPP compared with $6 at the end of 2014.
Trunk Club Value Creation Plan
As part of the acquisition, we created a Value Creation Plan (‚VCPƒ) to incentivize Trunk Club employees to increase the value of the Trunk
Club business. The VCP has three payout scenarios that are determined based on the Trunk Club business meeting minimum or exceeding
maximum 2018 sales and earnings metrics. If the minimum is not met, the payout is $0 (‚Outcome Aƒ); if the maximum is met, the payout is
$100 (‚Outcome Bƒ). If the sales and earnings metrics surpass the minimum but do not reach the maximum, the payout is based on the
incremental value growth of the Trunk Club business since acquisition, and will be between $0 and $100 (‚Outcome Cƒ).
We estimate the grant date fair value for each outcome and recognize expense based upon Outcome C, deemed most probable. If at any
time it becomes probable that another outcome will be achieved, compensation expense will be cumulatively adjusted based on the grant
date fair value associated with that outcome. The final payout amount will be determined at the end of 2018 and settled in 2019 at our
discretion in either cash or stock. We intend to settle the VCP in stock.
As of the year ended January•30, 2016, based on the payout scenario we believe is probable, we estimated the grant date fair value of $10
per unit using the Black-Scholes valuation model. Stock-based compensation expense is recognized on an accelerated basis due to the
performance criteria and graded vesting features of the VCP. In 2015, we recognized $3 in stock-based compensation expense associated
with the VCP.
As of January•30, 2016, we granted 0.9 of the 1.0 units available for grant. Total unrecognized stock-based compensation expense related to
nonvested VCP units was $4, which we expect to recognize over the next 31 months.
NOTE 15:€€INCOME TAXES
U.S. and foreign components of earnings before income taxes were as follows:
Fiscal year 2015 2014 2013
U.S. $996 $1,196 $1,189
Foreign (20)(11)…
Earnings before income taxes $976 $1,185 $1,189
Table of Contents
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and per unit amounts
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