Goldman Sachs 2012 Annual Report Download - page 216

Notes to Consolidated Financial Statements
Note 29.
Employee Incentive Plans
The cost of employee services received in exchange for a
share-based award is generally measured based on the
grant-date fair value of the award. Share-based awards that
do not require future service (i.e., vested awards, including
awards granted to retirement-eligible employees) are
expensed immediately. Share-based awards that require
future service are amortized over the relevant service
period. Expected forfeitures are included in determining
share-based employee compensation expense.
The firm pays cash dividend equivalents on outstanding
RSUs. Dividend equivalents paid on RSUs are generally
charged to retained earnings. Dividend equivalents paid on
RSUs expected to be forfeited are included in compensation
expense. The firm accounts for the tax benefit related to
dividend equivalents paid on RSUs as an increase to
additional paid-in capital.
In certain cases, primarily related to conflicted employment
(as outlined in the applicable award agreements), the firm
may cash settle share-based compensation awards
accounted for as equity instruments. For these awards,
whose terms allow for cash settlement, additional paid-in
capital is adjusted to the extent of the difference between
the value of the award at the time of cash settlement and the
grant-date value of the award.
Stock Incentive Plan
The firm sponsors a stock incentive plan, The Goldman
Sachs Amended and Restated Stock Incentive Plan (SIP),
which provides for grants of incentive stock options,
nonqualified stock options, stock appreciation rights,
dividend equivalent rights, restricted stock, RSUs, awards
with performance conditions and other share-based
awards. In the second quarter of 2003, the SIP was
approved by the firm’s shareholders, effective for grants
after April 1, 2003. The SIP was amended and restated,
effective December 31, 2008 and further amended on
December 20, 2012 to extend its term until Group Inc.’s
2013 Annual Meeting of Shareholders, at which meeting
approval of a new equity compensation plan will be voted
upon by shareholders.
The total number of shares of common stock that may be
delivered pursuant to awards granted under the SIP through
the end of the 2008 fiscal year could not exceed 250 million
shares. The total number of shares of common stock that
may be delivered for awards granted under the SIP in the
2009 fiscal year and each fiscal year thereafter cannot
exceed 5% of the issued and outstanding shares of common
stock, determined as of the last day of the immediately
preceding fiscal year, increased by the number of shares
available for awards in previous years but not covered by
awards granted in such years. As of December 2012 and
December 2011, 188.3 million and 161.0 million shares,
respectively, were available for grant under the SIP.
Restricted Stock Units
The firm grants RSUs to employees under the SIP, primarily
in connection with year-end compensation and
acquisitions. RSUs are valued based on the closing price of
the underlying shares on the date of grant after taking into
account a liquidity discount for any applicable post-vesting
transfer restrictions. Year-end RSUs generally vest and
underlying shares of common stock deliver as outlined in
the applicable RSU agreements. Employee RSU agreements
generally provide that vesting is accelerated in certain
circumstances, such as on retirement, death and extended
absence. Delivery of the underlying shares of common stock
is conditioned on the grantees satisfying certain vesting and
other requirements outlined in the award agreements. The
table below presents the activity related to RSUs.
214 Goldman Sachs 2012 Annual Report