Walmart 2012 Annual Report Download - page 42
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3 Shareholders’ Equity
Share-Based Compensation
The Company has awarded share-based compensation to associates
and nonemployee directors of the Company. The compensation
expense recognized for all plans was $355 million, $371 million and $335
million for fi scal 2012, 2011 and 2010, respectively. Share-based compen-
sation expense is included in operating, selling, general and administra-
tive expenses in the Company’s Consolidated Statements of Income. The
total income tax benefi t recognized for share-based compensation was
$134 million, $141 million and $126 million for fi scal 2012, 2011 and 2010,
respectively. The following table summarizes the Company’s share-based
compensation expense by award type:
Fiscal Years Ended January 31,
(Amounts in millions) 2012 2011 2010
Restricted stock and performance
share awards $142 $162 $140
Restricted stock rights 184 157 111
Stock options 29 52 84
Share-based compensation
expense $355 $371 $335
The Company’s shareholder-approved Stock Incentive Plan of 2010
(the “Plan”) became eff ective June 4, 2010 and amended and restated the
Company’s Stock Incentive Plan of 2005. The Plan was established to
grant stock options, restricted (non-vested) stock, performance shares
and other equity compensation awards for which 210 million shares of
common stock issued or to be issued under the Plan have been registered
under the Securities Act of 1933, as amended. The Company believes
that such awards serve to align the interests of its associates with those
of its shareholders.
The Plan’s award types are summarized as follows:
• Restricted stock grants are awards for shares that vest based on
the passage of time, achievement of performance criteria, or both.
Performance share awards vest based on the passage of time and
achievement of performance criteria and may range from 0% to 150% of
the original award amount. Vesting periods for both awards are generally
between three and fi ve years. Awards granted before January 1, 2008
may be settled in stock or deferred as stock or cash, based upon the
recipient’s election. Consequently, these awards are included in accrued
liabilities and deferred income taxes and other in the Company’s
Consolidated Balance Sheets, unless the recipient elected for the award
to be settled or deferred in stock. The fair value of the restricted stock
and performance share liabilities is remeasured each reporting period
and the total liability for these awards at January 31, 2012 and 2011 was
$16 million and $12 million, respectively. Restricted stock awards and
performance share awards issued in fi scal 2009 and thereafter, may
be settled or deferred in stock and are accounted for as equity in the
Company’s Consolidated Balance Sheets. The fair value of these awards
is determined on the date of grant using the Company’s stock price
discounted for the expected dividend yield through the vesting period
and is recognized ratably over the vesting period.
• Restricted stock rights provide rights to Company stock after a specifi ed
service period. For restricted stock rights issued in fi scal 2009 and
thereafter, 50% vest three years from the grant date and the remaining
50% vesting fi ve years from the grant date. The fair value of each
restricted stock right is determined on the date of grant using the stock
price discounted for the expected dividend yield through the vesting
period and is recognized ratably over the vesting period. The expected
dividend yield is based on the anticipated dividends over the vesting
period. The weighted-average discount for the dividend yield used to
determine the fair value of restricted stock rights granted in fi scal 2012,
2011 and 2010 was 11.7%, 9.1% and 8.5%, respectively.
• Stock options allow the associate to buy a specifi ed number of shares
at a set price. Options granted generally vest over fi ve years and have a
contractual term of ten years. Options may include restrictions related
to employment, satisfaction of performance conditions, or other
conditions. Under the Plan and prior plans, substantially all stock options
have been granted with an exercise price equal to the market price of
the Company’s stock at the date of grant.
In addition to the Plan, the Company’s subsidiary in the United Kingdom,
ASDA, has two other stock option plans for certain ASDA colleagues.
A combined 49 million shares of the Company’s common stock were
registered under the Securities Act of 1933, as amended, for issuance
upon the exercise of stock options granted under the Colleague Share
Ownership Plan 1999 (the “CSOP”) and the ASDA Sharesave Plan 2000
(“Sharesave Plan”).
• The CSOP grants have either a three- or six-year vesting period. The
CSOP options may be exercised during the two months immediately
following the vesting date.
• The Sharesave Plan grants options at 80% of the Company’s average
stock price for the three days preceding the grant date. The Sharesave
Plan options vest after three years and may generally be exercised
up to six months after the vesting date.
Notes to Consolidated Financial Statements