McKesson 2009 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2009 McKesson 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 128

  • 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
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
84
Non-employee directors receive an annual grant of up to 5,000 RSUs, which vest immediately and are expensed
upon grant. However, payment of any shares granted prior to the July 2008 Annual Meeting of Stockholders is
delayed until the director is no longer performing services for the Company. For those RSUs granted subsequent to
July 2008, the director may receive payment immediately or defer receipt of shares if they meet director stock
ownership guidelines. At March 31, 2009, 78,000 RSUs for our directors are vested, but shares have not been
issued.
PeRSUs are RSUs for which the number of RSUs awarded may be conditional upon the attainment of one or
more performance objectives over a specified period. PeRSUs are accounted for as variable awards until the
performance goals are reached and the grant date is established. The fair value of PeRSUs is determined by the
product of the number of shares eligible to be awarded and expected to vest, and the market price of the Company’s
common stock, commencing at the inception of the requisite service period. During the performance period, the
PeRSUs are re-valued using the market price and the performance modifier at the end of a reporting period. At the
end of the performance period, if the goals are attained, the awards are granted and classified as RSUs and
accounted for on that basis. For PeRSUs granted prior to 2009 with multiple vest dates, we recognize the fair value
of these awards on a graded vesting basis over the requisite service period of four years. 2009 PeRSUs and the
related RSUs (when they will be granted in 2010) have a single vest date and accordingly, we recognize expense on
a straight-line basis over the requisite service period of four years.
The following table summarizes RS and RSU activity during 2009, 2008 and 2007:
(In millions, except per share data) Shares
Weighted-
Average
Grant Date Fair
Value Per Share
Nonvested, March 31, 2006 1 $ 38.01
Granted 1 49.56
Nonvested, March 31, 2007 2 45.18
Granted 1 61.92
Nonvested, March 31, 2008 3 54.13
Granted 1 57.38
Vested (1) 57.61
Nonvested, March 31, 2009 3 54.70
The following table provides data related to RS and RSU activity:
Years Ended March 31,
(Dollars in millions) 2009 2008 2007
Total fair value of shares vested $ 101 $ 20 $ 5
Total compensation cost, net of estimated forfeitures,
related to nonvested RSU awards not yet recognized,
pre-tax $ 52 $ 49 $ 32
Weighted-average period in years over which RSU cost
is expected to be recognized 1 1 2
In May 2008, the Compensation Committee approved 1 million PeRSU target share units representing the base
number of awards that could be granted, if goals are attained, and would be granted in the first quarter of 2010 (the
“2009 PeRSU”). These target share units are not included in the table above as they have not been granted in the
form of RSUs. As of March 31, 2009, the total compensation cost, net of estimated forfeitures, related to nonvested
2009 PeRSUs not yet recognized was approximately $46 million, pre-tax (based on the period-end market price of
the Company’s common stock) and the weighted-average period over which the cost is expected to be recognized is
3 years.