Quest Diagnostics 2009 Annual Report Download - page 102

The following summarizes the activity relative to stock awards, including restricted stock awards, restricted
stock units and performance share units, for 2009, 2008 and 2007:
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
2009 2008 2007
Shares outstanding,
beginning of year . . 1,505 $49.77 677 $52.24 450 $52.41
Shares granted . . ..... 917 51.36 843 47.60 538 52.05
Shares vested . . . ..... (360) 51.06 (175) 51.67 (74) 52.30
Shares forfeited and
canceled ........... (60) 50.67 (62) 50.16 (100) 52.38
Adjustment to
estimate of
performance share
units to be earned . . 745 50.35 222 52.39 (137) 51.94
Shares outstanding,
end of year . . . ..... 2,747 $50.27 1,505 $49.77 677 $52.24
As of December 31, 2009, there was $48 million of unrecognized stock-based compensation cost related to
nonvested stock awards, which is expected to be recognized over a weighted average period of 1.9 years. Total
fair value of shares vested was $16.4 million, $8.4 million and $3.8 million for the years ended December 31,
2009, 2008 and 2007, respectively. The amount of unrecognized stock-based compensation cost is subject to
change based on revisions, if any, to management’s best estimates of the achievement of the performance goals
specified in such awards and the resulting number of shares that will be earned at the end of the performance
periods.
For the years ended December 31, 2009, 2008 and 2007, stock-based compensation expense totaled $75
million, $71 million and $57 million, respectively. Income tax benefits related to stock-based compensation
expense totaled $29 million, $28 million and $23 million for the years ended December 31, 2009, 2008 and
2007, respectively.
Employee Stock Purchase Plan
Under the Company’s Employee Stock Purchase Plan (“ESPP”), which was approved by the Company’s
shareholders at the 2006 Annual Meeting of Shareholders, substantially all employees can elect to have up to
10% of their annual wages withheld to purchase Quest Diagnostics common stock. The purchase price of the
stock is 85% of the market price of the Company’s common stock on the last business day of each calendar
month. Under the ESPP, the maximum number of shares of Quest Diagnostics common stock which may be
purchased by eligible employees is 5 million. Approximately 445, 436 and 448 thousand shares of common stock
were purchased by eligible employees in 2009, 2008 and 2007, respectively.
Defined Contribution Plans
The Company maintains qualified defined contribution plans covering substantially all of its employees, and
matches employee contributions up to a maximum of 6%. The Company’s expense for contributions to its
defined contribution plans aggregated $82 million, $78 million and $76 million for 2009, 2008 and 2007,
respectively.
Supplemental Deferred Compensation Plan
The Company’s supplemental deferred compensation plan is an unfunded, non-qualified plan that provides
for certain management and highly compensated employees to defer up to 50% of their salary in excess of their
defined contribution plan limits and for certain eligible employees, up to 95% of their variable incentive
compensation. The Company matches employee contributions up to a maximum of 6%. The compensation
deferred under this plan, together with Company matching amounts, are credited with earnings or losses measured
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)