Walgreens 2015 Annual Report Download - page 111

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A summary of total stock-based compensation expense follows (in millions):
2015 2014 2013
Stock options $ 24 $ 52 $ 51
Restricted stock units 68 48 33
Performance shares 11 8 15
Other 6 6 5
$109 $114 $104
16. Retirement Benefits
The Company sponsors several retirement plans, including defined benefit plans, defined contribution plans and
a postretirement health plan. Pursuant to the Second Step Transaction, the Company assumed a number of
retirement benefit plans in the United Kingdom and other countries. The Company valued the assumed pension
assets and liabilities on the acquisition date and uses an August 31 annual measurement date for its pension and
post-retirement plans.
Defined Benefit Pension Plans (non-U.S. plans)
The principal defined benefit pension plan is the Boots Pension Plan covering certain employees in the United
Kingdom (the “Boots Plan”). The Boots Plan is a funded final salary defined benefit plan providing pensions and
death benefits to members. The Boots Plan was closed to future accrual effective July 1, 2010 with pensions
calculated based on salaries up until that date. The Boots Plan is governed by a trustee board, which is
independent of the Company. The plan is subject to a full funding actuarial valuation on a triennial basis. The
Company also has two smaller defined benefit plans in the United Kingdom, both of which were closed to future
accruals effective July 1, 2010. Other defined benefit pension plans include smaller plans in Germany and
France.
The obligation related to the Company’s pension plans was acquired as a result of the Second Step Transaction.
The pension costs presented for 2015 represent the costs for the period from December 31, 2014 through
August 31, 2015. Prior to December 31, 2014, Alliance Boots was accounted for as an equity method investee
and as such, pension costs were included for fiscal 2013, 2014 and fiscal 2015 prior to the date of the Second
Step Transaction within Equity earnings in Alliance Boots.
Defined benefit pension plan assets were invested in the following classes of securities as of August 31, 2015:
Percentage of
Fair Market
Value
Equity securities 9.5%
Debt securities 81.5%
Real estate 5.6%
Other 3.4%
The investment strategy of the principal defined benefit pension plan is to hold approximately 85% of its assets
in a diverse portfolio of high quality bonds with the remainder invested in equity and real estate assets backing
longer term liabilities. Interest rate and inflation rate swaps are also employed to complement the role of fixed
and index-linked bond holdings in liability risk management.
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