Walmart 2014 Annual Report Download - page 46

3 Shareholders’ Equity
Share-Based Compensation
The Company has awarded share-based compensation to associates
and nonemployee directors of the Company. The compensation expense
recognized for all plans was $388 million, $378 million and $355 million
for scal 2014, 2013 and 2012, respectively. Share-based compensation
expense is included in operating, selling, general and administrative
expenses in the Company’s Consolidated Statements of Income. The
total income tax benet recognized for share-based compensation was
$145 million, $142 million and $134 million for scal 2014, 2013 and 2012,
respectively. The following table summarizes the Company’s share-based
compensation expense by award type:
Fiscal Years Ended January 31,
(Amounts in millions) 2014 2013 2012
Restricted stock and performance
share awards $141 $152 $142
Restricted stock rights 224 195 184
Stock options 23 31 29
Share-based compensation
expense $388 $378 $355
The Company’s shareholder-approved Stock Incentive Plan of 2010
(the “Plan”) became eective June 4, 2010 and amended and restated the
Company’s Stock Incentive Plan of 2005. The Plan was established to
grant stock options, restricted (non-vested) stock, performance shares
and other equity compensation awards 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.
The Plan’s award types are summarized as follows:
• Restricted Stock and Performance Share Awards. Restricted stock awards
are for shares that vest based on the passage of time and include
restrictions related to employment. Performance share awards vest
based on the passage of time and achievement of performance criteria
and may range from 0% to 150% of the original award amount. Vesting
periods for these awards are generally between three and ve years.
Restricted stock and performance share awards may be settled
or deferred in stock and are accounted for as equity in the Company’s
Consolidated Balance Sheets. The fair value of restricted stock awards
is determined on the date of grant and is expensed ratably over the
vesting period. The fair value of performance share awards is determined
on the date of grant using the Company’s stock price discounted for
the expected dividend yield through the vesting period and is
recognized over the vesting period.
• Restricted Stock Rights. Restricted stock rights provide rights to Company
stock after a specied service period; 50% vest three years from the
grant date and the remaining 50% vest ve years from the grant date.
The fair value of each restricted stock right 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 expected dividend yield is based on the anticipated divi-
dends over the vesting period. The weighted-average discount for the
dividend yield used to determine the fair value of restricted stock rights
granted in scal 2014, 2013 and 2012 was 10.3%, 12.2% and 11.7%,
respectively.
• Stock Options. Stock options allow the associate to buy a specied num-
ber of shares at a set price. Options granted generally vest over ve
years and have a contractual term of ten years. Options may include
restrictions related to employment, satisfaction of performance condi-
tions or other conditions. Under the Plan and prior plans, substantially
all stock options have been granted with an exercise price equal to the
market price of the Company’s stock at the date of grant.
In addition to the Plan, the Company’s subsidiary in the United Kingdom,
Asda, has two other stock option plans for certain Asda colleagues.
A combined 49 million shares of the Company’s common stock were
registered under the Securities Act of 1933, as amended, for issuance
upon the exercise of stock options granted under the Colleague Share
Ownership Plan 1999 (the “CSOP”) and the Asda Sharesave Plan 2000
(“Sharesave Plan”).
• CSOP. The CSOP grants have either a three- or six-year vesting period.
The CSOP options may be exercised during the two months
immediately following the vesting date.
• Sharesave Plan. The Sharesave Plan grants options at 80% of the
Company’s average stock price for the three days preceding the grant
date. The Sharesave Plan options vest after three years and may
generally be exercised up to six months after the vesting date.
44 Walmart 2014 Annual Report
Notes to Consolidated Financial Statements