Ford 2011 Annual Report Download - page 156

Download and view the complete annual report

Please find page 156 of the 2011 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 188

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188

Notes to the Financial Statements
154 Ford Motor Company | 2011 Annual Report
NOTE 20. SHARE-BASED COMPENSATION (Continued)
Outstanding RSU-stock are either strictly time-based or a combination of performance and time-based awards.
Expenses associated with RSU-stock are recorded in Selling, administrative, and other expense.
• Time-based RSU-stock generally have a graded vesting feature whereby one-third of each RSU-stock vests after
the first anniversary of the grant date, one-third after the second anniversary, and one-third after the third
anniversary. The expense is recognized using the graded vesting method.
• Performance RSU-stock have a performance period (usually 1-3 years) and usually a restriction period (usually
1-3 years). Compensation expense for performance RSU-stock is recognized when it is probable and estimable
as measured against the performance metrics. Expense is then recognized over the performance and restriction
periods, if any, based on the fair market value of Ford Common Stock at grant date.
We also grant stock options to our employees. We measure the fair value of the majority of our stock options using
the Black-Scholes option-pricing model, using historical volatility and our determination of the expected term. The
expected term of stock options is the time period that the stock options are expected to be outstanding. Historical data
are used to estimate option exercise behaviors and employee termination experience.
Stock options generally have a vesting feature whereby one-third of the stock options are exercisable after the first
anniversary of the grant date, one-third after the second anniversary, and one-third after the third anniversary. Stock
options expire ten years from the grant date and are expensed in Selling, administrative, and other expenses using a
three-year graded vesting methodology.
We issue new shares of Common Stock upon settlement of RSU-stock and options settleable in shares. During 2012,
we intend to implement a modest anti-dilutive share repurchase plan to offset share-based compensation.
Restricted Stock Units
RSU-stock activity during 2011 was as follows:
Outstanding, beginning of year
Granted
Vested
Forfeited
Outstanding, end of year
RSU-stock expected to vest
Shares
(millions)
72.4
8.6
(44.4)
(0.5)
36.1
35.5
Weighted-
Average Grant-
Date Fair Value
$3.96
14.47
3.19
11.03
7.31
N/A
Aggregate
Intrinsic Value
(millions)
$ 388.4
381.9
Intrinsic value of RSU-stock is measured by applying the closing stock price as of December 31 to the applicable
number of units. The fair value and intrinsic value of RSU-stock during 2011, 2010, and 2009 were as follows (in millions,
except RSU-stock per unit amounts):
Fair value
Granted
Weighted average for multiple grant dates (per unit)
Vested
Intrinsic value
Vested
2011
$123
14.47
141
478
2010
$130
12.69
112
522
2009
$171
2.13
66
95