Cardinal Health 2015 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2015 Cardinal Health annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 91

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

Notes to Financial Statements
69 Cardinal Health | Fiscal 2015 Form 10-K
The following table summarizes all stock option transactions under
the Plans:
(in millions, except per share amounts) Stock
Options
Weighted-Average
Exercise Price per
Common Share
Outstanding at June 30, 2013 15 $ 36.97
Granted 2 51.77
Exercised (7) 38.29
Canceled and forfeited — —
Outstanding at June 30, 2014 10 $ 39.16
Granted 1 72.15
Exercised (3) 36.21
Canceled and forfeited — —
Outstanding at June 30, 2015 8 $ 46.50
Exercisable at June 30, 2015 4 $ 37.19
The following tables provide additional detail related to stock option
activity:
(in millions, except per share amounts) 2015 2014 2013
Aggregate intrinsic value of outstanding
options at period end $ 281 $ 282 $ 156
Aggregate intrinsic value of exercisable
options at period end 193 185 113
Aggregate intrinsic value of exercised
options 132 155 64
Cash received upon exercise 72 227 121
Cash tax proceeds/(disbursements) realized
related to exercise 52 39 (19)
Total compensation cost, net of estimated
forfeitures, related to unvested stock options
not yet recognized, pre-tax 23 24 22
Total fair value of shares vested during the
year 20 20 28
Weighted-average grant date fair value per
stock option 15.80 10.32 8.15
(in years) 2015 2014 2013
Weighted-average remaining contractual life
of outstanding options 66 4
Weighted-average remaining contractual life
of exercisable options 54 3
Weighted-average period over which stock
option compensation cost is expected to be
recognized 22 2
Stock options are granted to our officers and certain employees. The
fair values were estimated on the grant date using a lattice valuation
model. We believe the lattice model provides reasonable estimates
because it has the ability to take into account individual exercise
patterns based on changes in our stock price and other variables,
and it provides for a range of input assumptions, which are disclosed
in the table below. The risk-free rate is based on the U.S. Treasury
yield curve at the time of the grant. We analyzed historical data to
estimate option exercise behaviors and employee terminations to be
used within the lattice model. The expected life of the options granted
was calculated from the option valuation model and represents the
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:
2015 2014 2013
Risk-free interest rate 1.8% - 2.1% 1.9% - 2.0% 1.1% - 1.3%
Expected volatility 26% 27% 29%
Dividend yield 1.7% - 1.9% 1.8% - 2.4% 2.1% - 2.5%
Expected life in years 76 6
Restricted Share Units
Restricted share units granted under the Plans generally vest in equal
annual installments over three years. Restricted share units accrue
cash dividend equivalents that are payable upon vesting of the
awards.
The following table summarizes all transactions related to restricted
share units under the Plans:
(in millions, except per share amounts) Restricted
Share Units
Weighted-Average
Grant Date Fair
Value per Share
Nonvested at June 30, 2013 3$ 38.74
Granted 152.40
Vested (1) 37.59
Canceled and forfeited ——
Nonvested at June 30, 2014 3$ 45.65
Granted 172.33
Vested (1) 44.94
Canceled and forfeited ——
Nonvested at June 30, 2015 3 $ 59.69
The following table provides additional data related to restricted share
unit activity:
(in millions) 2015 2014 2013
Total compensation cost, net of estimated
forfeitures, related to nonvested restricted
share unit awards not yet recognized, pre-tax $ 77 $ 75 $ 67
Weighted-average period in years over which
restricted share unit cost is expected to be
recognized (in years) 22 2
Total fair value of shares vested during the
year $ 61 $ 55 $ 60
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.