McKesson 2016 Annual Report Download - page 92

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
designated as equity awards, the fair value is measured at the grant date. For TSRUs that are eligible for cash
settlement and designated as liability awards, we measure the fair value at the end of each reporting period and
also adjust a corresponding liability on our balance sheet for changes in fair value.
The weighted-average assumptions used to estimate the fair value of TSRUs are as follows:
Years Ended March 31,
2016 2015
Expected stock price volatility 18% 21%
Expected dividend yield 0.4% 0.5%
Risk-free interest rate 0.9% 0.7%
Expected life (in years) 3 3
The following table summarizes restricted stock unit award activity during 2016:
(In millions, except per share data) Shares
Weighted-
Average
Grant Date Fair
Value Per Share
Nonvested, March 31, 2015 4 $129.57
Granted 1 240.35
Cancelled (1) 159.17
Vested (1) 89.44
Nonvested, March 31, 2016 3 $176.59
The following table provides data related to restricted stock unit award activity:
Years Ended March 31,
(In millions) 2016 2015 2014
Total fair value of shares vested $104 $126 $184
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock
unit awards not yet recognized, pre-tax $144 $206 $236
Weighted-average period in years over which restricted stock unit award cost is expected
to be recognized 2 2 2
Employee Stock Purchase Plan (“ESPP”)
The Company has an ESPP under which 21 million shares have been authorized for issuance. The ESPP
allows eligible employees to purchase shares of our common stock through payroll deductions. The deductions
occur over three-month purchase periods and the shares are then purchased at 85% of the market price at the end
of each purchase period. Employees are allowed to terminate their participation in the ESPP at any time during
the purchase period prior to the purchase of the shares. The 15% discount provided to employees on these shares
is included in compensation expense. The shares related to funds outstanding at the end of a quarter are included
in the calculation of diluted weighted average shares outstanding. These amounts have not been significant.
Shares issued under the ESPP were not material in 2016, 2015, and 2014. At March 31, 2016, 4 million shares
remain available for issuance.
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