Stock Based Compensation

6 Months Ended

Feb. 29, 2012

Notes to Financial Statements [Abstract]

Stock Based Compensation

Note 6.  Stock Compensation Plans

The Company granted 569,706 and 7,782,573 stock options under the Walgreen Co. Executive Stock Option Plan and the Walgreen Co. Stock Purchase/Option Plan (Share Walgreens) for the quarter and six month periods ended February 29, 2012, respectively.  This compares to 192,583 and 8,298,501 stock options granted in the quarter and six month period ended under the plans last year.  Total stock-based compensation expense was $18 million for the quarter and $53 million for the six month period ended February 29, 2012 compared to $20 million and $46 million for the same periods last year.  In accordance with Accounting Standards Codification (ASC) Topic 718 Compensation – Stock Compensation, compensation expense is recognized on a straight-line basis over the employee's vesting period or to the employee's retirement eligible date, if earlier.  Retiree eligible expenses recognized in the current quarter and six month periods were $2 million and $4 million, respectively, compared to no fully recognized retiree eligible expense for the quarter and $5 million for the six month periods ended February 28, 2011.  Compensation expense for the quarter and six month periods may not be representative of compensation expense for the entire fiscal year.  There were no material changes in the assumptions used to compute compensation expense during the current quarter.

The Company granted 33,427 and 753,620 restricted stock units under the Walgreen Co. Restricted Stock Unit Award Program for the quarter and six month periods ended February 29, 2012, compared to 24,387 and 783,344 restricted stock units in the same periods last year.  Dividends issued under the program, paid in the form of additional restricted stock units, totaled 15,100 units for the quarter and 31,645 units for the six month period ended February 29, 2012 versus 7,684 units and 17,077 units in the same periods last year.  The Company also granted 44,327 and 773,999 performance shares under the Walgreen Co. Performance Share Program for the quarter and six month period ended February 29, 2012 versus 19,324 and 806,791 shares in the same periods last year.  In accordance with ASC Topic 718, compensation expense is recognized on a straight line basis based on a three year cliff vesting schedule for the Restricted Stock Unit Award Program and straight line over a three year performance period, based on performance targets, for the Performance Share Program.  For the quarter and six month period ended February 29, 2012, the Company recognized $3 million and $17 million of expense related to these plans, respectively.  In the same periods last year, the Company recognized $10 million and $20 million of expense.