Sara Lee 2009 Annual Report Download - page 67

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At June 28, 2008 and June 30, 2007, the number of options
exercisable was 27,665 and 38,987, respectively, with weighted
average exercise prices of $18.61 and $18.98, respectively. The
weighted average grant date fair value of options granted during
2009, 2008 and 2007 was $2.67, $4.36 and $3.23, respectively.
The total intrinsic value of options exercised during 2009, 2008
and 2007 was nil, $1 and $5, respectively. The fair value of options
that vested during 2009, 2008 and 2007 was $2, $3 and $3,
respectively. The corporation received cash from the exercise of
stock options during 2009 of less than $1. As of June 27, 2009,
the corporation had $4 of total unrecognized compensation expense
related to stock option plans that will be recognized over the
weighted average period of 0.96 years.
Stock Unit Awards Restricted stock units (RSUs) are granted to
certain employees to incent performance and retention over periods
ranging from one to five years. Upon the achievement of defined
parameters, the RSUs are generally converted into shares of the
corporation’s common stock on a one-for-one basis and issued to
the employees. A substantial portion of all RSUs vest solely upon
continued future service to the corporation. A small portion of RSUs
vest based upon continued future employment and the achievement
of certain defined performance measures. The cost of these awards
is determined using the fair value of the shares on the date of grant,
and compensation is recognized over the period during which the
employees provide the requisite service to the corporation. A sum-
mary of the changes in the stock unit awards outstanding under the
corporation’s benefit plans during 2009 is presented below:
Weighted
Weighted Average
Average Remaining Aggregate
Grant Date Contractual Intrinsic
Shares in thousands Shares Fair Value Term (Years) Value
Nonvested share units
at June 28, 2008 6,230 $15.63 1.5 $76
Granted 3,408 13.73 – –
Vested (729) 16.43 – –
Forfeited (331) 14.98 – –
Nonvested share units
at June 27, 2009 8,578 $14.83 1.2 $82
Exercisable share units
at June 27, 2009 134 $16.55 4.1 $««1
The total fair value of share-based units that vested during
2009, 2008 and 2007 was $12, $29 and $66, respectively. The
weighted average grant date fair value of share-based units granted
during 2009, 2008 and 2007 was $13.73, $16.32 and $17.63.
As of June 27, 2009, the corporation had $36 of total unrecognized
compensation expense related to stock unit plans that will be
recognized over the weighted average period of 1.76 years.
Expense Recognized for All Stock-Based Compensation For all
share-based payments during 2009, 2008 and 2007, the corporation
recognized total compensation expense of $41, $38 and $41 and
recognized a tax benefit of $12, $10 and $10, respectively. The
corporation will satisfy the requirement for common stock for share-
based payments by issuing shares out of authorized but unissued
common stock.
Note 9 – Employee Stock Ownership Plans (ESOP)
The corporation maintains an ESOP that holds common stock
of the corporation and provides a retirement benefit for nonunion
domestic employees. During 2009, 2008 and 2007, the Sara Lee
ESOP unallocated common stock received total dividends of $4 or
$0.43 per share, $4 or $0.41 per share and $4 or $0.50 per share,
respectively. The purchase of the original stock by the Sara Lee
ESOP was funded both with debt guaranteed by the corporation and
loans from the corporation. The debt guaranteed by the corporation
was fully paid in 2004, and only loans from the corporation to the
ESOP remain. Each year, the corporation makes contributions that,
with the dividends on the common stock held by the Sara Lee ESOP,
are used to pay loan interest and principal. Shares are allocated to
participants based upon the ratio of the current year’s debt service
to the sum of the total principal and interest payments over the
remaining life of the loan.
Sara Lee ESOP-related expenses amounted to $5 in 2009, $7 in
2008 and $11 in 2007. Payments to the Sara Lee ESOP were $11
in 2009, $16 in 2008 and $19 in 2007.
Note 10 – Minority Interest in Subsidiaries
Minority interest in subsidiaries in 2009 consists of the equity interest
of minority investors in consolidated subsidiaries of the corporation.
The corporation’s consolidated minority interest expense of $11 in
2009, $10 in 2008 and $8 in 2007 is recorded in “Selling, general
and administrative expenses” in the Consolidated Statements
of Income.
Sara Lee Corporation and Subsidiaries 65