Quest Diagnostics 2011 Annual Report Download - page 103

The following summarizes the activity relative to stock awards, including restricted stock awards, restricted
stock units and performance share units, for 2011, 2010 and 2009:
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
2011 2010 2009
Shares outstanding,
beginning of year . . 2,140 $51.54 2,747 $50.27 1,505 $49.77
Shares granted . . ..... 877 56.81 876 55.44 917 51.36
Shares vested . . . ..... (930) 48.93 (742) 51.48 (360) 51.06
Shares forfeited and
canceled ........... (100) 55.47 (130) 52.34 (60) 50.67
Adjustment to
estimate of
performance share
units to be earned . . (30) 53.23 (611) 51.33 745 50.35
Shares outstanding,
end of year . . . ..... 1,957 $54.61 2,140 $51.54 2,747 $50.27
As of December 31, 2011, there was $34 million of unrecognized stock-based compensation cost related to
nonvested stock awards, which is expected to be recognized over a weighted average period of 1.7 years. Total
fair value of shares vested was $53 million, $41 million and $16 million for the years ended December 31, 2011,
2010 and 2009, 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, 2011, 2010 and 2009, stock-based compensation expense totaled $72
million, $54 million and $75 million, respectively. Income tax benefits related to stock-based compensation
expense totaled $28 million, $21 million and $29 million for the years ended December 31, 2011, 2010 and
2009, respectively.
Employee Stock Purchase Plan
Under the Company’s Employee Stock Purchase Plan (“ESPP”), 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 425, 464 and 445 thousand shares of common stock
were purchased by eligible employees in 2011, 2010 and 2009, 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%. As of January 1, 2012, the maximum Company
matching contribution was reduced from 6% to 5% of eligible employee compensation. The Company’s expense
for contributions to its defined contribution plans aggregated $82 million, $79 million and $82 million for 2011,
2010 and 2009, respectively.
Supplemental Deferred Compensation Plans
The Company has a supplemental deferred compensation plan that 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%. As of January 1, 2012,
the maximum Company matching contribution was reduced from 6% to 5% of eligible employee compensation.
The compensation deferred under this plan, together with Company matching amounts, are credited with earnings
F-31
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)