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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
71
Non-employee directors receive an annual grant of RSUs, which vest immediately and are expensed upon grant.
However, issuance of any underlying shares granted prior to the July 2008 Annual Meeting of Stockholders is
deferred until the director is no longer performing services for the Company. For those RSUs granted subsequent to
July 2008, the director may choose to receive payment immediately or defer receipt of the underlying shares if they
meet director stock ownership guidelines. At March 31, 2011, 113,000 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. Total compensation expense for 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 compensation expense for PeRSUs is re-computed 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 during
or prior to 2009, for which the related RSU grant has multiple vesting dates, we recognize the compensation expense
of these awards on a graded vesting basis over the requisite aggregate service period of four years. For PeRSUs
granted during or after 2009, for which the related RSU has a single vesting date, we recognize compensation
expense of these awards on a straight-line basis over the requisite aggregate service period of four years.
The following table summarizes RSU activity during 2011, 2010 and 2009:
(In millions, except per share data)
Shares
Weighted-
Average
Grant Date Fair
Value Per Share
Nonvested, March 31, 2008
3
$
54.13
Granted
1
57.38
Vested
(1)
57.61
Nonvested, March 31, 2009
3
$
54.70
Granted
2
40.94
Vested
(1)
50.42
Nonvested, March 31, 2010
4
$
49.21
Granted
3
67.84
Vested
(1)
61.05
Nonvested, March 31, 2011
6
$
57.79
The following table provides data related to RSU activity:
Years Ended March 31,
(Dollars in millions)
2011
2010
2009
Total fair value of shares vested
$
43
$
74
$
101
Total compensation cost, net of estimated forfeitures,
related to nonvested RSU awards not yet recognized,
pre-tax
$
131
$
61
$
52
Weighted-average period in years over which RSU cost
is expected to be recognized 2 2 1
In May 2010, 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 2012 (the
“2011 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, 2011, the total compensation cost, net of estimated forfeitures, related to nonvested
2011 PeRSUs not yet recognized was approximately $93 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.