Lowe's 2012 Annual Report Download - page 63

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49
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 $28.25, $25.29 and $23.88 in 2012, 2011, and 2010, respectively. The total fair value of restricted
stock awards vested was approximately $118 million, $61 million and $37 million in 2012, 2011 and 2010, respectively.
Transactions related to restricted stock awards for the year ended February 1, 2013 are summarized as follows:
Shares
(In thousands)
Weighted-
Average
Grant-Date
Fair Value
Per Share
N
onvested at February 3, 2012 ............................................................................ 9,444 $ 21.30
Granted ................................................................................................................ 2,481 28.25
Vested .................................................................................................................. (4,146) 17.17
Canceled or forfeited ........................................................................................... (645) 25.61
N
onvested at February 1, 2013 ............................................................................ 7,134 $ 25.72
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 2012, 2011 and 2010,
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
$140,000 for both 2012 and 2011, and $115,000 in 2010. During 2012, 54,000 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 $26.36, $24.25 and $24.75 in 2012, 2011 and 2010, respectively. The total fair value of deferred stock
units vested was $1 million in 2012, 2011 and 2010. During 2011, 0.3 million fully vested deferred stock units were
released as a result of termination of service. During 2012, an insignificant amount of fully vested deferred stock units were
released. At February 1, 2013, there were 0.6 million deferred stock units outstanding, all of which were vested.
Performance Share Units
The Company has issued two types of Performance Share Units - those based on the achievement of targeted Company
return on non-cash average assets (RONCAA) and those based on targeted Company improvement in brand differentiation.
Performance share units do not have dividend rights. In general, upon the achievement of a minimum threshold, 50% to
150% of these awards vest at the end of a three-year service period from the date of grant based upon achievement of the
performance goal specified in the performance share unit agreement.
Performance share units are expensed on a straight-line basis over the requisite service period, based on the probability of
achieving the performance goal, with changes in expectations recognized as an adjustment to earnings in the period of the
change. If the performance goal is not met, no compensation cost is recognized and any previously recognized
compensation cost is reversed. The Company uses historical data to estimate the timing and amount of forfeitures.
RONCAA Awards
Performance share units issued based on the achievement of targeted RONCAA, which is considered a performance
condition, are classified as equity awards 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. The weighted-average
grant-date fair value per unit for performance share units classified as equity awards granted in 2012 and 2011 was $26.60
and $25.13, respectively. No performance share units were granted in 2010. No performance share units vested in 2012,
2011, or 2010.