Annual Report 2011 - Ford Motor Company

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Notes to the Financial Statements NOTE 20. SHARE-BASED COMPENSATION (Continued) As of December 31, 2011, there was about $13 million in unrealized compensation cost related to non-vested stock options. This expense will be recognized over a weighted-average period of 1.3 years. A summary of the status of our non-vested shares and changes during 2011 follows: Non-vested, beginning of year Granted Vested Forfeited Non-vested, end of year 156 Ford Motor Company | 2011 Annual Report Shares (millions) 28.8 4.4 (15.1) (0.5) 17.6 Weighted- Average Grant- Date Fair Value $ 2.77 8.48 2.43 2.79 4.49 The estimated fair value of stock options at the time of grant using the Black-Scholes option-pricing model was as follows: Fair value per stock option Assumptions: Annualized dividend yield Expected volatility Risk-free interest rate Expected stock option term (in years) Details on various stock option exercise price ranges are as follows: Range of Exercise Prices $1.96 – $2.84 $5.11 – $10.18 $11.10 – $15.98 $16.09 – $17.05 Total stock options Other Share-Based Awards Shares (millions) 22.4 41.5 48.3 32.2 144.4 2011 $ 8.48 —% 53.2% 3.2% 7.1 Outstanding Options Weighted- Average Life (years) 7.20 4.21 3.85 0.30 2010 $ 7.21 Weighted- Average Exercise Price $ 2.10 7.42 13.20 16.88 —% 53.4% 3.0% 6.9 2009 $ 1.07 Exercisable Options Shares (millions) 13.7 41.5 39.4 32.2 126.8 —% 52.0% 2.7% 6.0 Weighted- Average Exercise Price $ 2.11 7.42 13.08 16.88 Under the 1998 LTIP and 2008 LTIP, we have granted other share-based awards to certain employees. These awards include restricted stock grants, cash-settled restricted stock units, and stock appreciation rights. These awards have various vesting criteria which may include service requirements, individual performance targets, and company-wide performance targets. Other share-based compensation cost was as follows (in millions): Compensation cost (a) __________ (a) Net of tax of $3 million, $0, and $0 in 2011, 2010, and 2009, respectively. 2011 $ (9) 2010 $ 6 2009 $ 11
Notes to the Financial Statements NOTE 21. EMPLOYEE SEPARATION ACTIONS As part of our plan to realign our vehicle assembly capacity to operate profitably at the current demand and changing model mix, we have implemented a number of different employee separation plans. The accounting for employee separation plans is dependent on the specific design of the plans. Under certain labor agreements, we are required to pay transitional benefits to our employees who are idled. For employees who will be temporarily idled, we expense the benefits on an as-incurred basis. For employees who will be permanently idled, we expense all of the future benefits payments in the period when it is probable that the employees will be permanently idled. Our reserve balance for these future benefit payments to permanently idled employees takes into account several factors: the demographics of the population at each affected facility, redeployment alternatives, estimate of benefits to be paid, and recent experience relative to voluntary redeployments. We also incur payments to employees for separation actions. The costs of voluntary employee separation actions are recorded at the time of employee acceptance, unless the acceptance requires explicit approval by the Company. The costs of involuntary separation programs are accrued when management has approved the program and the affected employees are identified. Automotive Sector Transitional Benefits Our collective bargaining agreements with the UAW and the CAW require us to pay a portion of wage and benefits for a specified period of time to employees who are considered permanently idled and who meet certain conditions. We have established a reserve for employee benefits that we expect to provide under our collective bargaining agreements. At December 31, 2011 and 2010, this reserve was $153 million and $372 million, respectively. The balance in the reserve primarily relates to the closure of our St. Thomas Assembly Plant in Canada, which was announced in the fourth quarter of 2009. Separation Actions The following table shows pre-tax charges for hourly and salaried employee separation actions, which are recorded in Automotive cost of sales and Selling, administrative and other expenses for the years ended December 31 (in millions): Ford Europe Ford North America Ford South America Ford Asia Pacific Africa The charges above exclude costs for pension and OPEB. Financial Services Sector Separation Actions 2011 $ 67 154 15 38 2010 $ 56 110 3 1 2009 $ 109 225 20 17 We recorded in Selling, administrative and other expenses pre-tax charges of $32 million, $33 million, and $64 million for 2011, 2010, and 2009, respectively, for employee separation actions. These charges exclude costs for pension and OPEB. Ford Motor Company | 2011 Annual Report 157
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PROFITABLE GROWTH FOR ALL Ford Moto
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ON THE COVER The all-new Ford Fusio
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A MESSAGE FROM THE PRESIDENT AND CE
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Environmental and social goals are
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1 1) Joe Hinrichs, Group Vice Presi
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To meet regional needs in Asia Paci
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UTILITIES The latest One Ford globa
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LINCOLN CUTTING-EDGE PRODUCTS, PERS
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GREEN 2 Ford continues to work to f
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SMART As technology becomes ever mo
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1) Ford team at the ringing of the
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THE POWER OF CHOICE With record sal
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PEOPLE HELPING PEOPLE Ford voluntee
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FINANCIAL CONTENT * 26 Management
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Management’s Discussion and Analy
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Quantitative and Qualitative Disclo
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Report of Independent Registered Pu
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Sector Statement of Operations FORD
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Sector Balance Sheet FORD MOTOR COM
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Condensed Sector Statement of Cash
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Notes to the Financial Statements F
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Annual Report 2011 - Ford Motor Company

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