Nike 2015 Annual Report Download - page 64

PART II
The weighted average contractual life remaining for options outstanding and
options exercisable at May 31, 2015 was 6.0 years and 4.7 years,
respectively. The aggregate intrinsic value for options outstanding and
exercisable at May 31, 2015 was $3,178 million and $2,235 million,
respectively. The aggregate intrinsic value was the amount by which the
market value of the underlying stock exceeded the exercise price of the
options. The total intrinsic value of the options exercised during the years
ended May 31, 2015, 2014 and 2013 was $795 million, $474 million and
$293 million, respectively.
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 of 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 end of the offering
period. Employees purchased 1.4 million, 1.4 million and 1.6 million shares
during each of the three years ended May 31, 2015, 2014 and 2013,
respectively.
From time to time, the Company grants restricted stock and restricted stock
units to key employees under the 1990 Plan. The number of shares
underlying such awards granted to employees during the years ended
May 31, 2015, 2014 and 2013 were 0.3 million, 0.3 million and 1.6 million,
respectively, with weighted average values per share of $79.38, $63.89 and
$46.86, respectively. Recipients of restricted stock are entitled to cash
dividends and to vote their respective shares throughout the period of
restriction. Recipients of restricted stock units are entitled to dividend
equivalent cash payments upon vesting. The value of all grants of restricted
stock and restricted stock units was established by the market price on the
date of grant. During the years ended May 31, 2015, 2014 and 2013, the
aggregate fair value of restricted stock and restricted stock units vested was
$20 million, $28 million and $25 million, respectively, determined as of the
date of vesting. As of May 31, 2015, the Company had $48 million of
unrecognized compensation costs from restricted stock units to be
recognized in Operating overhead expense over a weighted average period of
1.5 years.
NOTE 12 — Earnings Per Share
The following is a reconciliation from Basic earnings per common share to Diluted earnings per common share. The computation of Diluted earnings per common
share omitted options to purchase an additional 0.1 million, 0.1 million and 0.1 million shares of common stock outstanding for the years ended May 31, 2015,
2014 and 2013, respectively, because the options were anti-dilutive.
Year Ended May 31,
(In millions, except per share data) 2015 2014 2013
Determination of shares:
Weighted average common shares outstanding 861.7 883.4 897.3
Assumed conversion of dilutive stock options and awards 22.7 22.4 19.1
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 884.4 905.8 916.4
Earnings per common share from continuing operations:
Basic $ 3.80 $ 3.05 $ 2.74
Diluted $ 3.70 $ 2.97 $ 2.68
Earnings per common share from discontinued operations:
Basic $ — $ — $ 0.02
Diluted $ — $ — $ 0.02
Basic earnings per common share for NIKE, Inc. $ 3.80 $ 3.05 $ 2.76
Diluted earnings per common share for NIKE, Inc. $ 3.70 $ 2.97 $ 2.70
NOTE 13 — Benefit Plans
The Company has a qualified 401(k) Savings and Profit Sharing Plan to which
all U.S. employees who work at least 1,000 hours in a year are able to
participate. The Company matches a portion of employee contributions.
Company contributions to the savings plan were $58 million, $51 million and
$46 million for the years ended May 31, 2015, 2014 and 2013, respectively,
and are included in Operating overhead expense. The terms of the plan also
allow for annual discretionary profit sharing contributions to the accounts of
eligible employees by the Company as determined by the Board of Directors.
Contributions of $58 million, $49 million and $47 million were made to the
plan and are included in Operating overhead expense for the years ended
May 31, 2015, 2014 and 2013, respectively.
The Company also has a Long-Term Incentive Plan (“LTIP”) that was adopted
by the Board of Directors and approved by shareholders in September 1997
and later amended in fiscal 2007. The Company recognized $68 million, $46
million and $50 million of Operating overhead expense related to cash awards
under the LTIP during the years ended May 31, 2015, 2014 and 2013,
respectively.
The Company allows certain highly compensated employees and non-
employee directors of the Company to defer compensation under a
nonqualified deferred compensation plan. Deferred compensation plan
liabilities were $443 million and $390 million at May 31, 2015 and 2014,
respectively, and primarily classified as long-term in Deferred income taxes
and other liabilities.
The Company has pension plans in various countries worldwide. The pension
plans are only available to local employees and are generally government
mandated. The liability related to the unfunded pension liabilities of the plans
was $98 million and $100 million at May 31, 2015 and May 31, 2014,
respectively, which was primarily classified as long-term in Deferred income
taxes and other liabilities.
NIKE, INC. 2015 Annual Report and Notice of Annual Meeting 125
FORM 10-K