Microsoft 2013 Annual Report Download - page 76

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The components of accumulated other comprehensive income were as follows:
(In millions)
June 30,
2013
2012
2011
Net unrealized gains (losses) on derivatives
$ 66
$ 92
$ (163)
Net unrealized gains on investments
1,794
1,431
1,821
Translation adjustments and other
(117)
(101)
205
Accumulated other comprehensive income
$ 1,743
$ 1,422
$ 1,863
NOTE 20 — EMPLOYEE STOCK AND SAVINGS PLANS
We grant stock-based compensation to directors and employees. At June 30, 2013, an aggregate of 425 million shares
were authorized for future grant under our stock plans, covering stock options, stock awards, and leadership stock
awards. Awards that expire or are canceled without delivery of shares generally become available for issuance under the
plans. We issue new shares of Microsoft common stock to satisfy exercises and vesting of awards granted under all of our
stock plans.
Stock-based compensation expense and related income tax benefits were as follows:
(In millions)
Year Ended June 30,
2013
2012
2011
Stock-based compensation expense
$ 2,406
$ 2,244
$ 2,166
Income tax benefits related to stock-based compensation
$ 842
$ 785
$ 758
Stock Plans (Excluding Stock Options)
Stock awards
Stock awards (“SAs”) are grants that entitle the holder to shares of Microsoft common stock as the award vests. SAs
generally vest over a five-year period.
Leadership stock awards
Leadership stock awards (“LSAs”) are a form of SAs in which the number of shares ultimately received depends on our
business performance against specified performance metrics. LSAs replaced shared performance stock awards (“SPSA”)
in fiscal year 2013. Shares previously issued under the SPSA program will continue to vest ratably under their original
term, generally with a three-year remaining service period.
A base number of LSAs are granted in each fiscal year, which represents the performance period for the awards.
Following the end of the performance period, the number of shares can be increased by 25% if certain performance
metrics are met. One quarter of the awarded shares will vest one year after the grant date. The remaining shares will vest
semi-annually during the following three years.
Executive incentive plan
Under the Executive Incentive Plan (“EIP”), the Compensation Committee awards performance-based compensation
comprising both cash and SAs to executive officers and certain senior executives. For executive officers, their awards are
based on an aggregate incentive pool equal to a percentage of consolidated operating income. For fiscal years 2013,
2012, and 2011, the pool was 0.35%, 0.3%, and 0.25% of operating income, respectively. The SAs vest ratably in August
of each of the four years following the grant date. The final cash awards will be determined after each performance period
based on individual and business performance.