Ford 2013 Annual Report Download - page 129

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Ford Motor Company | 2013 Annual Report 127
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20. SHARE-BASED COMPENSATION (Continued)
We also grant stock options to our employees. We measure the fair value 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 each grant of 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 10 years from the grant date.
Expense for RSUs and stock options is recorded in Selling, administrative, and other expense and is based on the fair
value at grant date. RSU and stock option expense is recognized using the graded vesting method over the shorter of the
vesting period or the time period an employee becomes eligible to retain the award at retirement. Performance-based
RSU expense is recognized when it is probable and estimable as measured against the performance metrics over the
performance and restriction periods, if any.
We measure the intrinsic value of RSUs and stock options by comparing the award price to the closing stock price at
December 31.
We issue new shares of Common Stock upon vesting of RSUs and upon exercise of stock options.
Restricted Stock Units
RSU activity during 2013 was as follows (in millions, except for weighted average grant-date fair value):
Shares
Weighted-
Average Grant-
Date Fair Value
Aggregate
Intrinsic Value
Outstanding, beginning of year 18.2 $13.18
Granted 10.8 12.77
Vested (7.7)13.11
Forfeited (1.0)12.52
Outstanding, end of year 20.3 13.11 $313
RSU-stock expected to vest 20.0 N/A 309
The fair value and intrinsic value of RSUs was as follows (in millions, except RSU per unit amounts):
2013 2012 2011
Fair value
Granted $ 138 $102 $123
Weighted average for multiple grant dates (per unit) 12.77 12.43 14.47
Vested 101 109 141
Intrinsic value
Vested $ 119 $329 $478
Compensation cost for RSUs for the years ended December 31 was as follows (in millions):
2013 2012 2011
Compensation cost (a) $ 81 $ 62 $ 84
__________
(a) Net of tax benefit of $48 million, $36 million, and $49 million in 2013, 2012, and 2011, respectively.
As of December 31, 2013, there was approximately $58 million in unrecognized compensation cost related to non-
vested RSUs. This expense will be recognized over a weighted average period of 1.8 years.
For more information visit www.annualreport.ford.com