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70
McKESSON CORPORATION
FINANCIAL NOTES (Continued)
5. Share-Based Compensation
We provide share-based compensation to our employees, officers and non-employee directors, including stock options,
an employee stock purchase plan, restricted stock units (“RSUs”) and performance-based restricted stock units (“PeRSUs”)
(collectively, “share-based awards”). Most of our share-based awards are granted in the first quarter of each fiscal year.
Compensation expense for the share-based awards is recognized for the portion of awards ultimately expected to vest.
We estimate the number of share-based awards, which will ultimately vest primarily based on historical experience. The
estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period and is adjusted when
actual forfeitures occur. The actual forfeitures in future reporting periods could be higher or lower than current estimates.
The compensation expense recognized has been classified in the consolidated statements of operations or capitalized in
the consolidated balance sheets in the same manner as cash compensation paid to our employees. There was no material
share-based compensation expense capitalized as part of the cost of an asset in 2013, 2012 and 2011.
Impact on Net Income
The components of share-based compensation expense and related tax benefits are as follows:
Years Ended March 31,
(In millions) 2013 2012 2011
RSUs (1) $ 109 $ 97 $ 79
PeRSUs (2) 23 24 27
Stock options 24 23 22
Employee stock purchase plan 11 10 9
Share-based compensation expense 167 154 137
Tax benefit for share-based compensation expense (3) (59) (55) (48)
Share-based compensation expense, net of tax $ 108 $ 99 $ 89
(1) This expense was primarily the result of PeRSUs awarded in prior years, which converted to RSUs due to the attainment of goals during the
applicable years' performance period.
(2) Represents estimated compensation expense for PeRSUs that are conditional upon attaining performance objectives during the current year's
performance period.
(3) Income tax benefit is computed using the tax rates of applicable tax jurisdictions. Additionally, a portion of pre-tax compensation expense is
not tax-deductible.
Stock Plans
The 2005 Stock Plan provides our employees, officers and non-employee directors share-based long-term incentives. The
2005 Stock Plan permits the granting of up to 42.5 million shares in the form of stock options, restricted stock, RSUs,
PeRSUs and other share-based awards. As of March 31, 2013, 5.8 million shares remain available for future grant under the
2005 Stock Plan.