Carnival Cruises 2011 Annual Report Download - page 33

Our total share-based compensation expense was $46 million, $43 million and $50 million in fiscal 2011, 2010 and
2009, respectively, of which $42 million, $40 million and $46 million has been included in selling and administrative
expenses and $4 million, $3 million and $4 million in cruise payroll and related expenses in fiscal 2011, 2010 and
2009, respectively.
Stock Option Plans
The Committee generally set stock option exercise prices at 100% or more of the fair market value of the underlying
common stock/ordinary shares on the date the option was granted. Generally, employee options either vest evenly over
five years or at the end of three years. Our employee options granted prior to October 2005 have a ten-year term and
those options granted thereafter have a seven-year term. In the fourth quarter of fiscal 2007, the Committee decided to
cease granting employee stock options and to instead grant restricted stock awards (“RSAs”) or restricted stock units
(“RSUs”) to our employee groups who were previously granted options. This change from options to RSAs or RSUs
enables us to grant equity awards in a more uniform method to our employees. Since fiscal 2001, Carnival Corporation
Board of Director options vest evenly over five years and have a ten-year term. In 2008, the Committee decided to also
cease granting stock options to non-executive board members and will instead grant them RSAs and/or RSUs.
A combined summary of Carnival Corporation and Carnival plc stock option activity during the year ended
November 30, 2011 was as follows:
Shares
Weighted-Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value (a)
(in years) (in millions)
Outstanding at November 30, 2010 ................... 12,719,848 $43.91
Exercised ........................................ (1,640,145) $32.04
Forfeited or expired ................................ (650,752) $44.93
Outstanding at November 30, 2011 ................... 10,428,951 $45.65 2.0 $6
Exercisable at November 30, 2011 .................... 10,379,088 $45.66 2.0 $6
(a) The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option
exercise price at November 30, 2011.
As of the dates of exercise, the total intrinsic value of options exercised in fiscal 2011, 2010 and 2009 was $18 million,
$17 million and $1 million, respectively. As of November 30, 2011, unrecognized compensation cost related to
unvested stock options that will be recognized in 2012 was not significant.
RSAs/RSUs and PBS Awards
RSAs generally have the same rights as Carnival Corporation common stock, except for transfer restrictions and
forfeiture provisions. RSAs have been granted to certain officers and non-executive board members and either have
three or five-year cliff vesting or vest evenly over five years after the grant date. In addition, Carnival Corporation and
Carnival plc grant RSUs that vest evenly over five years or at the end of three or five years after the grant date and
accrue forfeitable dividend equivalents on each outstanding RSU, in the form of additional RSUs, based on dividends
declared. The share-based compensation expense associated with RSAs/RSUs is based on the quoted market price of
the Carnival Corporation or Carnival plc shares on the date of grant, and is amortized to expense using the straight-line
method from the grant date through the earlier of the vesting date or the estimated retirement eligibility date.
In 2011, the Committee approved PBS awards to be granted to certain key Carnival Corporation & plc executives.
These PBS awards are based on our earnings per share growth over a three-year period, with award opportunity to earn
from zero to 200% of the number of target shares underlying the award achieved at the end of the third year. The PBS
awards will accrue forfeitable dividend equivalents based on dividends declared.
32