Lowe's 2010 Annual Report Download - page 47

LOWE’S 2010 ANNUAL REPORT 43
Transactions related to performance-based restricted stock
awards issued for the year ended January 28, 2011 are summarized
as follows:
Weighted-Average
Shares Grant-Date Fair
(In thousands) Value Per Share
Nonvested฀at฀January฀29,฀2010฀ ฀1,484฀฀ $27.30
Vested (151) 32.18
Canceled or forfeited (475) 31.77
Nonvested฀at฀January฀28,฀2011฀ ฀858฀฀฀ $23.97
Restricted Stock Awards
Restricted stock awards are valued at the market price of a share of
the Company’s common stock on the date of grant. In general, these
awards vest at the end of a three- to five-year period from the date of
grant฀and฀are฀expensed฀on฀a฀straight-line฀basis฀over฀that฀period,฀which฀
is considered to be the requisite service period. The Company uses
historical data to estimate the timing and amount of forfeitures. The
weighted-average grant-date fair value per share of restricted stock
awards฀granted฀was฀$23.88,฀$16.03฀and฀$23.75฀in฀2010,฀2009,฀and฀
2008, respectively. The total fair value of restricted stock awards vested
was฀approximately฀$37฀million,฀$12฀million฀and฀$18฀million฀in฀2010,฀2009฀
and 2008, respectively.
Transactions related to restricted stock awards issued for the year
ended January 28, 2011 are summarized as follows:
Weighted-Average
Shares Grant-Date Fair
(In thousands) Value Per Share
Nonvested฀at฀January฀29,฀2010฀ ฀8,457฀฀ $20.86
Granted 3,458 23.88
Vested (1,554) 30.23
Canceled or forfeited (506) 20.45
Nonvested฀at฀January฀28,฀2011฀ ฀9,855฀฀ $20.46
Deferred Stock Units
Deferred stock units are valued at the market price of a share of the
Company’s common stock on the date of grant. For non-employee
Directors,฀these฀awards฀vest฀immediately฀and฀are฀expensed฀on฀the฀
grant date. During 2010, 2009 and 2008 each non-employee Director
was awarded a number of deferred stock units determined by dividing
the annual award amount by the fair market value of a share of the
Company’s common stock on the award date and rounding up to
the฀next฀100฀units.฀The฀annual฀award฀amount฀used฀to฀determine฀the฀
number฀of฀deferred฀stock฀units฀granted฀to฀each฀Director฀was฀$115,000฀
in 2010, 2009 and 2008. During 2010, 47,000 deferred stock units
were granted and immediately vested for non-employee Directors.
The weighted-average grant-date fair value per share of deferred stock
units฀granted฀was฀$24.75,฀$19.01฀and฀$24.00฀in฀2010,฀2009฀and฀2008,฀
respectively. The total fair value of deferred stock units vested was
approximately฀$1฀million฀in฀both฀2010฀and฀2009฀and฀$10฀million฀in฀
2008. At January 28, 2011, there were 0.7 million deferred stock units
outstanding all of which were vested.
Restricted Stock Units
Restricted stock units do not have dividend rights and are valued at the
market price of a share of the Company’s common stock on the date of
grant฀less฀the฀present฀value฀of฀dividends฀expected฀during฀the฀requisite฀
service period. In general, these awards vest at the end of a three-year
period฀from฀the฀date฀of฀grant฀and฀are฀expensed฀on฀a฀straight-line฀basis฀
over that period, which is considered to be the requisite service period.
The Company uses historical data to estimate the timing and amount
of forfeitures. The weighted-average grant-date fair value per share of
restricted฀stock฀units฀granted฀was฀$22.84,฀$15.63฀and฀$22.80฀in฀2010,฀
2009 and 2008, respectively. An insignificant number of restricted stock
units vested in 2010, 2009 and 2008.
Transactions related to restricted stock units issued for the year
ended January 28, 2011 are summarized as follows:
Weighted-Average
Shares Grant-Date Fair
(In thousands) Value Per Share
Nonvested฀at฀January฀29,฀2010฀ ฀92฀฀ $18.35
Granted 99 22.84
Vested (11) 22.72
Canceled or forfeited (12) 20.16
Nonvested฀at฀January฀28,฀2011฀ ฀168฀฀฀ $20.58
ESPP
The purchase price of the shares under the ESPP equals 85% of the
closing price on the date of purchase. The Company’s share-based
payment฀expense฀is฀equal฀to฀15%฀of฀the฀closing฀price฀on฀the฀date฀of฀
purchase. The ESPP is considered a liability award and is measured
at fair value at each reporting date, and the share-based payment
expense฀is฀recognized฀over฀the฀six-month฀offering฀period.฀The฀
Company issued 3,846,086 shares of common stock pursuant to
this plan during the year ended January 28, 2011.
NOTE 9 EMPLOYEE RETIREMENT PLANS
The Company maintains a defined contribution retirement plan for its
eligible employees (the 401(k) Plan). Employees are eligible to participate
in฀the฀401(k)฀Plan฀six฀months฀(180฀days฀prior฀to฀January฀1,฀2011)฀
after their original date of service. Eligible employees are automatically
enrolled in the 401(k) Plan at a 1% deferral rate, unless the employee
elects otherwise. The Company makes contributions to the 401(k)
Plan each payroll period, based upon a matching formula applied to
employee deferrals (the Company match). Plan participants are eligible
to฀receive฀the฀Company฀match฀after฀completing฀six฀months฀(180฀days฀
prior to January 1, 2011) of continuous service. The Company match
varies฀based฀on฀how฀much฀the฀employee฀elects฀to฀defer฀up฀to฀a฀maxi-
mum of 4.25% of eligible compensation. The Company match is
invested identically to employee contributions and vests immediately
in the participant accounts.
The Company maintains a Benefit Restoration Plan to supplement
benefits provided under the 401(k) Plan to plan participants whose
benefits are restricted as a result of certain provisions of the Internal
Revenue Code of 1986. This plan provides for employee salary
deferrals and employer contributions in the form of a company match.