Polaris 2011 Annual Report Download - page 75

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Share-based compensation expense: The amount of compensation cost for share-based awards to be
recognized during a period is based on the portion of the awards that are ultimately expected to vest. The
Company estimates stock option forfeitures at the time of grant and revises those estimates in subsequent periods
if actual forfeitures differ from those estimates. The Company analyzes historical data to estimate pre-vesting
forfeitures and records share compensation expense for those awards expected to vest.
Total share-based compensation expenses were as follows:
For the Year Ended
December 31,
(In thousands) 2011 2010 2009
Option plan ..................................... $ 9,948 $ 6,132 $ 4,653
Other share-based awards .......................... 63,872 52,807 12,354
Total share-based compensation before tax ............ 73,820 58,939 17,007
Tax benefit ..................................... 27,929 23,039 6,620
Total share-based compensation expense included in Net
income ...................................... $45,891 $35,900 $10,387
These share-based compensation expenses are reflected in Cost of sales and Operating expenses in the
accompanying consolidated statements of income. For purposes of determining the estimated fair value of option
awards on the date of grant under ASC Topic 718, Polaris has used the Black-Scholes option-pricing model.
Assumptions utilized in the model are evaluated and revised, as necessary, to reflect market conditions and
experience.
At December 31, 2011, there was $35,567,000 of total unrecognized share-based compensation expense
related to unvested share-based awards. Unrecognized share-based compensation expense is expected to be
recognized over a weighted-average period of 1.80 years. Included in unrecognized share-based compensation is
approximately $28,997,000 related to stock options and $6,570,000 for restricted stock.
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