Walmart 2011 Annual Report Download - page 40

38 Walmart 2011 Annual Report
4 Share-Based Compensation
As of January 31, 2011, the Company has awarded share-based compensation
to executives and other associates of the Company through various
share-based compensation plans. The compensation cost recognized
for all plans was $371 million, $335 million and $302 million for scal 2011,
2010 and 2009, respectively. Virtually all of our share-based compensation
costs are classied as operating, selling, general and administrative expenses
in the accompanying Consolidated Statements of Income. The total
income tax benet recognized for all share-based compensation plans
was $141 million, $126 million and $112 million for scal 2011, 2010 and
2009, respectively. The following table summarizes our share-based
compensation expense by award type:
Fiscal Years Ended January 31,
(Amounts in millions) 2011 2010 2009
Restricted stock and performance
share awards $162 $140 $134
Restricted stock rights 157 111 74
Stock options 52 84 94
Share-based compensation expense $371 $335 $302
The Company’s shareholder-approved Stock Incentive Plan of 2010 (the
“Plan”), which amended and restated the Company’s Stock Incentive Plan
of 2005, eective June 4, 2010, was established to grant stock options,
restricted (non-vested) stock, performance shares and other equity com-
pensation awards to its associates and nonemployee directors for which
210 million shares of common stock issued or to be issued under the Plan
have been registered under the Securities Act of 1933, as amended. The
Company believes that such awards serve to align the interests of its
associates with those of its shareholders.
Under the Plan and prior plans, substantially all stock option awards
have been granted with an exercise price equal to the market price of the
Company’s stock at the date of grant. Options granted generally vest
over ve years and have a contractual term of 10 years.
The Company’s United Kingdom subsidiary, ASDA, also oers two other
stock option plans to its colleagues. The rst plan, the ASDA Colleague
Share Ownership Plan 1999 (the “CSOP”), grants options to certain col-
leagues. The initial CSOP grants have both a three-year and a six-year
vesting with subsequent grants vesting over six years. The CSOP shares
have an exercise period of two months immediately following the vest-
ing date. The second plan, the ASDA Sharesave Plan 2000 (the “Sharesave
Plan”), grants options to certain colleagues at 80% of the average market
value of the three days preceding the date of grant. Sharesave options
become exercisable after three years and generally expire six months
after becoming exercisable. A combined 49 million shares of common
stock were registered under the Securities Act of 1933, as amended, for
issuance upon the exercise of stock options granted under the CSOP and
the Sharesave Plan.
Restricted Stock and Performance Share Awards
Under the Plan, the Company grants various types of awards of restricted
stock to certain associates. These grants include awards for shares that
vest based on the passage of time, performance criteria, or both. Vesting
periods vary. Restricted stock awards granted before January 1, 2008 may
be settled in stock, or deferred as stock or cash, based upon the associate’s
election. Consequently, these awards are classied as liabilities in the
accompanying Consolidated Balance Sheets, unless the associate has
elected for the award to be settled or deferred in stock. Restricted stock
awards issued in scal 2009 and thereafter generally are settled or
deferred in stock.
Performance share awards under the Plan vest based on the passage
of time and achievement of performance criteria. Based on the extent to
which the targets are achieved, vested shares may range from 0% to 150%
of the original award amount. Because the performance shares issued
before January 1, 2008 may be settled in stock or cash, the performance
shares are included in accrued liabilities and deferred income taxes and
other in the accompanying Consolidated Balance Sheets, unless the asso-
ciate has elected for the award to be settled or deferred in stock. Begin-
ning in scal 2009, performance shares issued are settled or deferred in
stock; therefore, they are accounted for as equity in the accompanying
Consolidated Balance Sheets. The fair value of performance share awards
accounted for as equity is determined on the date of grant using the stock
price discounted for the expected dividend yield through the vesting
period and is recognized ratably over the vesting period.
The fair value of the restricted stock and performance share liabilities is
remeasured each reporting period. The total liability for restricted stock
and performance share awards at January 31, 2011 and 2010 was $12 mil-
lion and $63 million, respectively.
A summary of the Company’s restricted stock and performance share
award activity for scal 2011 presented below represents the maximum
number of shares that could be earned or vested under the Plan
(in thousands, except per share prices):
Weighted-
Average
Grant-Date
Restricted Stock and Fair Value
Performance Share Awards Shares Per Share
Restricted Stock and
Performance Share Awards
at February 1, 2010 14,324 $50.18
Granted 4,842 55.52
Vested (3,533) 48.90
Forfeited (2,016) 50.88
Restricted Stock and
Performance Share Awards
at January 31, 2011 13,617 $52.33
Notes to Consolidated Financial Statements