Nike 2009 Annual Report Download - page 79

NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In addition to the 1990 Plan, the Company gives employees the right to purchase shares at a discount to the
market price under employee stock purchase plans (“ESPPs”). Employees are eligible to participate through
payroll deductions up to 10% of their compensation. At the end of each six-month offering period, shares are
purchased by the participants at 85% of the lower of the fair market value at the beginning or the ending of the
offering period. Employees purchased 1.0 million shares, 0.8 million shares, and 0.8 million shares during the
years ended May 31, 2009, 2008 and 2007, respectively.
From time to time, the Company grants restricted stock and unrestricted stock to key employees under the
1990 Plan. The number of shares granted to employees during the years ended May 31, 2009, 2008 and 2007
were 75,000, 110,000 and 345,000 with weighted average values per share of $56.97, $59.50 and $39.38,
respectively. Recipients of restricted shares are entitled to cash dividends and to vote their respective shares
throughout the period of restriction. The value of all of the granted shares was established by the market price on
the date of grant. During the years ended May 31, 2009, 2008 and 2007, the fair value of restricted shares vested
was $9.9 million, $9.0 million and $5.5 million, respectively, determined as of the date of vesting.
During the year ended May 31, 2007, the Company also granted shares of stock under the Long-Term
Incentive Plan (“LTIP”), adopted by the Board of Directors and approved by shareholders in September 1997.
During the year ended May 31, 2007, LTIP participants agreed to amend their grant agreements to eliminate the
ability to receive payments in shares of stock; shares of stock are no longer awarded. Prior to the amendment, the
LTIP provided for the issuance of cash or up to 2.0 million shares of Class B Common Stock to certain
executives based on performance targets established over three-year time periods. Once performance targets are
achieved, cash or shares of stock are issued. The shares are immediately vested upon grant. The value of the
shares is established by the market price on the date of issuance. Under the LTIP, 3,000 shares with a price of
$38.84 were issued during the year ended May 31, 2007 for the plan year ended May 31, 2006. Compensation
expense recognized relating to shares issued during the year ended May 31, 2007 was not material. The Company
recognized $17.6 million, $35.9 million and $30.0 million of selling and administrative expense related to the
cash awards during the years ended May 31, 2009, 2008 and 2007, respectively.
Note 12 — Earnings Per Share
The following represents a reconciliation from basic earnings per common share to diluted earnings per
common share. Options to purchase an additional 13.2 million, 6.6 million and 9.5 million shares of common
stock were outstanding at May 31, 2009, 2008 and 2007, respectively, but were not included in the computation
of diluted earnings per share because the options were antidilutive.
Year Ended May 31,
2009 2008 2007
(In millions, except per share data)
Determination of shares:
Weighted average common shares outstanding ............ 484.9 495.6 503.8
Assumed conversion of dilutive stock options and awards . . . 5.8 8.5 6.1
Diluted weighted average common shares outstanding .......... 490.7 504.1 509.9
Basic earnings per common share .......................... $ 3.07 $ 3.80 $ 2.96
Diluted earnings per common share ......................... $ 3.03 $ 3.74 $ 2.93
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