Sara Lee 2010 Annual Report Download - page 72

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Notes to financial statements
As of July 3, 2010, the corporation had $32 million of total
unrecognized compensation expense related to stock unit plans that
will be recognized over the weighted average period of 1.71 years.
In millions except per share data 2010 2009 2008
Stock Unit Awards
Fair value of share-based units
that vested during the fiscal year $÷÷«35 $÷÷«12 $÷÷«29
Weighted average grant date
fair value of share based units
granted during the fiscal year $10.06 $13.73 $16.32
All Stock-Based Compensation
Total compensation expense $÷÷«35 $÷÷«41 $÷÷«38
Tax benefit on compensation expense $÷÷«13 $÷÷«12 $÷÷«10
Note 10 – Employee Stock Ownership Plans (ESOP)
The corporation maintains an ESOP that holds common stock of
the corporation that is used to fund a portion of the corporation’s
matching program for its 401(k) savings plan for domestic non-union
employees. 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. The number of unallocated shares in the
ESOP was 7 million at July 3, 2010 and 8 million at June 27, 2009.
Expense recognition for the ESOP is accounted for under the grand-
fathered provisions contained within US GAAP.
The expense for the 401(k) recognized by the ESOP amounted
to $7 million in 2010, $5 million in 2009 and $7 million in 2008.
Payments to the Sara Lee ESOP were $11 million in 2010 and
2009, and $16 million in 2008.
The corporation received cash from the exercise of stock options
during 2010 of $13.2 million. As of July 3, 2010, the corporation
had $6 million of total unrecognized compensation expense related
to stock option plans that will be recognized over the weighted
average period of 1.09 years.
In millions except per share data 2010 2009 2008
Number of options exercisable
at end of fiscal year 13,121 22,721 27,665
Weighted average exercise price
of options exercisable
at end of fiscal year $17.66 $18.13 $18.61
Weighted average grant date
fair value of options granted
during the fiscal year $÷1.88 $÷2.67 $÷4.36
Total intrinsic value of options
exercised during the fiscal year $÷÷0.9 $÷÷0.0 $÷÷1.0
Fair value of options that vested
during the fiscal year $÷÷6.3 $÷÷2.0 $÷÷3.0
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
summary of the changes in the stock unit awards outstanding under
the corporation’s benefit plans during 2010 is presented below:
Weighted
Weighted Average Aggregate
Average Remaining Intrinsic
Grant Date Contractual Value
Shares in thousands Shares Fair Value Term (Years) (in millions)
Nonvested share units
at June 27, 2009 8,578 $14.83 1.2 $÷82
Granted 4,048 10.06 – –
Vested (2,376) 14.70 – –
Forfeited (1,236) 13.89 – –
Nonvested share units
at July 3, 2010 9,014 $12.86 1.2 $126
Exercisable share units
at July 3, 2010 153 $16.29 4.2 $÷÷2
70 Sara Lee Corporation and Subsidiaries