Annual Report 2011 - Ford Motor Company
Annual Report 2011 - Ford Motor Company
Annual Report 2011 - Ford Motor Company
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Notes to the Financial Statements<br />
NOTE 20. SHARE-BASED COMPENSATION (Continued)<br />
Outstanding RSU-stock are either strictly time-based or a combination of performance and time-based awards.<br />
Expenses associated with RSU-stock are recorded in Selling, administrative, and other expense.<br />
• Time-based RSU-stock generally have a graded vesting feature whereby one-third of each RSU-stock vests after<br />
the first anniversary of the grant date, one-third after the second anniversary, and one-third after the third<br />
anniversary. The expense is recognized using the graded vesting method.<br />
• Performance RSU-stock have a performance period (usually 1-3 years) and usually a restriction period (usually<br />
1-3 years). Compensation expense for performance RSU-stock is recognized when it is probable and estimable<br />
as measured against the performance metrics. Expense is then recognized over the performance and restriction<br />
periods, if any, based on the fair market value of <strong>Ford</strong> Common Stock at grant date.<br />
We also grant stock options to our employees. We measure the fair value of the majority of our stock options using<br />
the Black-Scholes option-pricing model, using historical volatility and our determination of the expected term. The<br />
expected term of stock options is the time period that the stock options are expected to be outstanding. Historical data<br />
are used to estimate option exercise behaviors and employee termination experience.<br />
Stock options generally have a vesting feature whereby one-third of the stock options are exercisable after the first<br />
anniversary of the grant date, one-third after the second anniversary, and one-third after the third anniversary. Stock<br />
options expire ten years from the grant date and are expensed in Selling, administrative, and other expenses using a<br />
three-year graded vesting methodology.<br />
We issue new shares of Common Stock upon settlement of RSU-stock and options settleable in shares. During 2012,<br />
we intend to implement a modest anti-dilutive share repurchase plan to offset share-based compensation.<br />
Restricted Stock Units<br />
RSU-stock activity during <strong>2011</strong> was as follows:<br />
Outstanding, beginning of year<br />
Granted<br />
Vested<br />
Forfeited<br />
Outstanding, end of year<br />
RSU-stock expected to vest<br />
154 <strong>Ford</strong> <strong>Motor</strong> <strong>Company</strong> | <strong>2011</strong> <strong>Annual</strong> <strong>Report</strong><br />
Shares<br />
(millions)<br />
72.4<br />
8.6<br />
(44.4)<br />
(0.5)<br />
36.1<br />
35.5<br />
Weighted-<br />
Average Grant-<br />
Date Fair Value<br />
$ 3.96<br />
14.47<br />
3.19<br />
11.03<br />
7.31<br />
N/A<br />
Aggregate<br />
Intrinsic Value<br />
(millions)<br />
$ 388.4<br />
Intrinsic value of RSU-stock is measured by applying the closing stock price as of December 31 to the applicable<br />
number of units. The fair value and intrinsic value of RSU-stock during <strong>2011</strong>, 2010, and 2009 were as follows (in millions,<br />
except RSU-stock per unit amounts):<br />
Fair value<br />
Granted<br />
Weighted average for multiple grant dates (per unit)<br />
Vested<br />
Intrinsic value<br />
Vested<br />
<strong>2011</strong><br />
$ 123<br />
14.47<br />
141<br />
478<br />
2010<br />
$ 130<br />
12.69<br />
112<br />
522<br />
2009<br />
381.9<br />
$ 171<br />
2.13<br />
66<br />
95