United Healthcare 2010 Annual Report Download - page 90

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Restricted Shares
Restricted shares generally vest ratably over three to five years. Compensation expense related to restricted
shares is based on the share price on date of grant. Restricted share activity for the year ended December 31,
2010 is summarized in the table below:
(shares in millions) Shares
Weighted-
Average Grant
Date Fair Value
Nonvested at beginning of period ............................................ 11 $32
Granted ................................................................. 6 32
Vested .................................................................. (3) 33
Forfeited ................................................................ (1) 32
Nonvested at end of period ................................................. 13 $31
The weighted-average grant date fair value of restricted shares granted during 2010, 2009 and 2008 was
approximately $32 per share, $29 per share and $34 per share, respectively. The total fair value of restricted
shares vested during 2010, 2009 and 2008 was $99 million, $56 million and $17 million, respectively.
Employee Stock Purchase Plan
The Company’s Employee Stock Purchase Plan (ESPP) is intended to enhance employee commitment to the
goals of the Company, by providing a means of achieving stock ownership at advantageous terms to eligible
employees of the Company. Eligible employees are allowed to purchase the Company’s stock at a discounted
price, which is 85% of the lower market price of the Company’s common stock at the beginning or at the end of
the six-month purchase period. During 2010, 2009 and 2008, 3.8 million shares, 3.7 million shares and
2.9 million shares of common stock, respectively, were purchased under the ESPP. The compensation expense is
included in the compensation expense amounts recognized and discussed below. As of December 31, 2010, there
were 5.6 million shares of common stock available for issuance under the ESPP.
Share-Based Compensation Recognition
The Company recognizes compensation expense for share-based awards, including stock options, SARs and
restricted shares, on a straight-line basis over the related service period (generally the vesting period) of the
award, or to an employee’s eligible retirement date under the award agreement, if earlier. Beginning with share-
based awards granted in 2009, the Company’s equity award program includes a retirement provision that treats
all employees who are age 55 or older with at least ten years of recognized employment with the Company as
retirement-eligible. For 2010, 2009 and 2008, the Company recognized compensation expense related to its
share-based compensation plans of $326 million ($278 million net of tax effects), $334 million ($220 million net
of tax effects) and $305 million ($202 million net of tax effects), respectively. Share-based compensation
expense is recognized in Operating Costs in the Company’s Consolidated Statements of Operations. As of
December 31, 2010, there was $449 million of total unrecognized compensation cost related to share awards that
is expected to be recognized over a weighted-average period of 1.2 years. For 2010, 2009 and 2008, the income
tax benefit realized from share-based award exercises was $78 million, $94 million and $106 million,
respectively.
As further discussed in Note 10 of Notes to the Consolidated Financial Statements, the Company maintains a
share repurchase program. The objectives of the share repurchase program are to optimize the Company’s capital
structure, cost of capital and return to shareholders, as well as to offset the dilutive impact of shares issued for
share-based award exercises.
Other Employee Benefit Plans
The Company also offers a 401(k) plan for all employees. Compensation expense related to this plan was not
significant for the years 2010, 2009 and 2008.
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