Estee Lauder 2010 Annual Report Download - page 145

144 THE EST{E LAUDER COMPANIES INC.
Restricted Stock Units
The Company granted approximately 979,800 RSUs
during fiscal 2010 which, at the time of grant, were
scheduled to vest as follows: 39,800 on July 1, 2010,
487,600 on November 1, 2010, 39,800 on July 2, 2011,
272,600 on October 31, 2011, 39,800 on July 2, 2012 and
100,200 on October 31, 2012, all subject to the continued
employment or retirement of the grantees. Certain RSUs
granted in fiscal 2010 are accompanied by dividend
equivalent rights that will be payable in cash upon
settlement of the RSU and, as such, were valued at the
closing market value of the Company’s Class A Common
Stock on the date of grant. Other RSUs granted in fiscal
2010 are not accompanied by dividend equivalent
rights and, as such, were valued at the closing market
value of the Company’s Class A Common Stock on the
date of grant less the discounted present value of the div-
idends expected to be paid on the shares during the
vesting period.
The following is a summary of the status of the
Company’s RSUs as of June 30, 2010 and activity during
the fiscal year then ended: Weighted-Average
Grant Date
Shares Fair Value Per Share
(Shares in thousands)
Nonvested at June 30, 2009 922.5 $48.31
Granted 979.8 33.50
Vested (558.8) 47.48
Forfeited (42.6) 39.85
Nonvested at June 30, 2010 1,300.9 37.79
Share Units
The Company grants share units to certain non-employee
directors under the Non-Employee Director Share Incen-
tive Plan. The share units are convertible into shares of
Class A Common Stock as provided for in that plan. Share
units are accompanied by dividend equivalent rights that
are converted to additional share units when such divi-
dends are declared. The following is a summary of the
status of the Company’s share units as of June 30, 2010
and activity during the fiscal year then ended:
Weighted-Average
Grant Date
Shares Fair Value Per Share
(Shares in thousands)
Outstanding at June 30, 2009 22.6 $38.02
Granted 3.5 46.63
Dividend equivalents 0.3 49.54
Converted — —
Outstanding at June 30, 2010 26.4 39.27
the weighted-average expected option life assumption,
the Company considers the exercise behavior of past
grants and models the pattern of aggregate exercises. The
average risk-free interest rate is based on the U.S. Treasury
strip rate for the expected term of the options and the
average dividend yield is based on historical experience.
Performance Share Units
During fiscal 2010, the Company granted 165,300 PSUs,
which will be settled in stock subject to the achievement
of the Company’s net sales, net earnings per share and
return on invested capital goals for the three fiscal years
ending June 30, 2012. Settlement will be made pursuant
to a range of opportunities relative to the net sales and
diluted net earnings per common share targets of the
Company and, as such, the compensation cost of the PSU
is subject to adjustment based upon the attainability of
these target goals. No settlement will occur for results
below the applicable minimum threshold and additional
shares shall be issued if performance exceeds the targeted
performance goals. Certain PSUs are accompanied by
dividend equivalent rights that will be payable in cash
upon settlement of the PSU. Other PSUs granted in fiscal
2010 are not accompanied by dividend equivalent rights
and, as such, were valued at the closing market value of
the Company’s Class A Common Stock on the date of
grant less the discounted present value of the dividends
expected to be paid on the shares during the vesting
period. These awards are subject to the provisions of the
agreement under which the PSUs are granted. The PSUs
were valued at the closing market value of the Company’s
Class A Common Stock on the date of grant and generally
vest at the end of the performance period. Approximately
47,500 shares of Class A Common Stock are anticipated
to be issued, relative to the target goals set at the time of
issuance, in settlement of the 93,200 PSUs that vested as
of June 30, 2010. In September 2009, 31,100 shares of the
Company’s Class A Common Stock were issued and
related accrued dividends were paid, relative to the target
goals set at the time of issuance, in settlement of 96,100
PSUs which vested as of June 30, 2009.
The following is a summary of the status of the
Company’s PSUs as of June 30, 2010 and activity during
the fiscal year then ended: Weighted-Average
Grant Date
Shares Fair Value Per Share
(Shares in thousands)
Nonvested at June 30, 2009 224.2 $48.57
Granted 165.3 33.42
Vested (93.2) 42.58
Forfeited — —
Nonvested at June 30, 2010 296.3 42.00