Lowe's 2014 Annual Report Download - page 65

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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 of performance share units classified as equity awards granted was $47.05, $36.48 and $26.60 in 2014, 2013 and
2012, respectively. No performance share units vested in 2014, 2013 or 2012.
Transactions related to performance share units classified as equity awards for the year ended January 30, 2015 are summarized
as follows:
Units
(In thousands)1
Weighted-
Average Grant-
Date Fair Value
Per Unit
Nonvested at January 31, 2014 1,001
$ 28.85
Granted 378
47.05
Canceled or forfeited (422 ) 26.68
Nonvested at January 30, 2015 957
$ 37.00
¹ The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit
agreements. As of January 30, 2015, the maximum number of units that could vest under the provisions of the agreements
was 1.4 million for the RONCAA awards.
Brand Differentiation Awards
Performance share units issued based on targeted Company improvement in brand differentiation, which is not considered a
market, performance, or service related condition, are classified as liability awards and are measured at fair value at each
reporting date. The awards are valued at the market price of a share of the Company’s common stock at the end of each
reporting period less the present value of dividends expected to be issued during the remaining requisite service period. No
performance share units classified as liability awards were granted in 2014. The weighted-average grant-date fair value per
unit of performance share units classified as liability awards granted was $36.48 and $26.60 in 2013 and 2012,
respectively. No performance share units vested in 2014, 2013 or 2012. The total liability for performance share units
classified as liability awards at January 30, 2015 was $9 million.
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