Cardinal Health 2014 Annual Report Download - page 50

Cardinal Health, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
48
length of time in years that the options granted are expected to
be outstanding. Expected volatilities are based on implied
volatility from traded options on our common shares and
historical volatility over a period of time commensurate with the
contractual term of the option grant (up to ten years). The
following table provides the range of assumptions used to
estimate the fair value of stock options:
2014 2013 2012
Risk-free interest
rate 1.9% - 2.0% 1.1% - 1.3% 1.2% - 1.3%
Expected volatility 27% 29% 29%
Dividend yield 1.8% - 2.4% 2.1% - 2.5% 2.0% - 2.1%
Expected life in
years 66 6
Restricted Shares and Restricted Share Units
Restricted shares and restricted share units granted under the
Plans generally vest in equal annual installments over three
years. Restricted shares and restricted share units accrue cash
dividend equivalents that are payable upon vesting of the
awards.
The following table summarizes all transactions related to
restricted shares and restricted share units under the Plans:
(in millions, except per share amounts) Shares
Weighted-Average
Grant Date Fair
Value per Share
Nonvested at June 30, 2012 4 $ 35.46
Granted 2 40.02
Vested (2) 33.41
Canceled and forfeited (1) 38.84
Nonvested at June 30, 2013 3 $ 38.74
Granted 1 52.40
Vested (1) 37.59
Canceled and forfeited — —
Nonvested at June 30, 2014 3 $ 45.65
The following table provides additional data related to restricted
share and restricted share unit activity:
(in millions) 2014 2013 2012
Total compensation cost, net of estimated
forfeitures, related to nonvested restricted
share and share unit awards not yet
recognized, pre-tax $ 75 $ 67 $ 67
Weighted-average period over which
restricted share and share unit cost is
expected to be recognized (in years) 22 2
Total fair value of shares vested during the
year $ 55 $ 60 $ 54
Performance Share Units
Performance share units vest over a three-year performance
period based on achievement of specific performance goals.
Based on the extent to which the targets are achieved, vested
shares may range from zero to 200 percent of the target award
amount. Performance share units accrue cash dividend
equivalents that are payable upon vesting of the awards.
The following table summarizes all transactions related to
performance share units under the Plans (based on target award
amounts):
(in millions, except per share
amounts)
Performance
Share Units
Weighted-Average
Grant Date Fair
Value per Share
Nonvested at June 30, 2012 0.5 $ 42.60
Granted 0.3 39.81
Vested — —
Canceled and forfeited — —
Nonvested at June 30, 2013 0.8 $ 41.37
Granted 0.3 51.49
Vested (1) (0.2) 41.60
Canceled and forfeited — —
Nonvested at June 30, 2014 0.9 $ 44.41
(1) Vested based on achievement of 143 percent of the target performance
goal.
The following table provides additional data related to
performance share unit activity:
(in millions) 2014 2013 2012
Total compensation cost, net of estimated
forfeitures, related to nonvested performance
share units not yet recognized, pre-tax $ 15 $ 12 $ 12
Weighted-average period over which
performance share unit cost is expected to be
recognized (in years) 22 2
Total fair value of shares vested during the
year $ 7 $ — $ —
Employee Retirement Savings Plans
Substantially all of our domestic non-union employees are
eligible to be enrolled in our company-sponsored contributory
retirement savings plans, which include features under
Section 401(k) of the Internal Revenue Code of 1986, as
amended, and provide for matching and profit sharing
contributions by us. Our contributions to the plans are
determined by the Board of Directors subject to certain minimum
requirements as specified in the plans. The total expense for
our employee retirement savings plans was $75 million, $68
million and $53 million for fiscal 2014, 2013 and 2012,
respectively.