SEARS HOLDINGS CORP | 2013 | FY | 3

EQUITY
Stock-based Compensation
We account for stock-based compensation using the fair value method in accordance with accounting standards regarding share-based payment transactions. We recorded $12 million, $15 million and $14 million in total compensation expense relative to stock-based compensation arrangements during 2013, 2012, and 2011, respectively. At February 1, 2014, we had $3 million in total compensation cost related to nonvested awards, which is expected to be recognized over approximately the next three years.
We do not currently have an employee stock option plan and at February 1, 2014, there are no outstanding options.
We granted restricted stock awards to certain associates. These restricted stock awards typically vest in zero to three years from the date of grant, provided the grantee remains employed by us at the vesting date. The fair value of these awards is equal to the market price of our common stock on the date of grant. We do not currently have a broad-based program that provides for restricted stock awards on an annual basis. Changes in restricted stock awards for 2013, 2012, and 2011 were as follows:
 
 
2013
 
2012
 
2011
(Shares in thousands)
 
Shares 
 
Weighted-
Average
Fair Value
on Date
of Grant
 
Shares
 
Weighted-
Average
Fair Value
on Date
of Grant
 
Shares 
 
Weighted-
Average
Fair Value
on Date
of Grant 
Beginning of year balance
 
424

 
$
57.72

 
496

 
$
65.02

 
313

 
$
74.09

Granted
 
135

 
49.19

 
175

 
49.20

 
386

 
59.60

Vested
 
(281
)
 
57.71

 
(172
)
 
60.89

 
(72
)
 
81.55

Forfeited
 
(73
)
 
68.47

 
(75
)
 
78.59

 
(131
)
 
61.62

End of year balance
 
205

 
$
48.24

 
424

 
$
57.72

 
496

 
$
65.02


millions
 
2013
 
2012
 
2011
Aggregate fair value of shares granted based on weighted average fair value at date of grant
 
$
7

 
$
9

 
$
23

Aggregate fair value of shares vesting during period
 
14

 
10

 
5

Aggregate fair value of shares forfeited during period
 
4

 
4

 
8


Approximately 124,000 shares of the 205,000 shares of unvested restricted stock outstanding at February 1, 2014 are scheduled to vest during 2014, subject to satisfaction of applicable vesting conditions.
Common Share Repurchase Program
From time to time, we repurchase shares of our common stock under a common share repurchase program authorized by our Board of Directors. The common share repurchase program was initially announced in 2005 with a total authorization since inception of the program of $6.5 billion. During 2013 and 2012, we repurchased no shares of our common stock under our common share repurchase program. During 2011, we repurchased approximately 2.8 million of our common shares at a total cost of approximately $183 million, or an average price of $65.66 per share. At February 1, 2014, we had approximately $504 million of remaining authorization under our common share repurchase program.
The share repurchase program has no stated expiration date and share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods.
 Accumulated Other Comprehensive Loss
The following table displays the components of accumulated other comprehensive loss:
millions
February 1,
2014
 
February 2,
2013
 
January 28,
2012
Pension and postretirement adjustments (net of tax of $(328), $(443) and $(492), respectively)
$
(1,036
)
 
$
(1,408
)
 
$
(1,575
)
Cumulative unrealized derivative gain (loss) (net of tax of $0, $0 and $0, respectively)
2

 
—

 
(5
)
Currency translation adjustments (net of tax of $(38), $(39) and $(26), respectively)
(83
)
 
(51
)
 
(29
)
Accumulated other comprehensive loss
$
(1,117
)
 
$
(1,459
)
 
$
(1,609
)
Pension and postretirement adjustments relate to the net actuarial gain on our pension and postretirement plans recognized as a component of accumulated other comprehensive loss.
Accumulated other comprehensive loss attributable to noncontrolling interests at February 1, 2014, February 2, 2013, and January 28, 2012 was $53 million, $64 million and $9 million, respectively.
Income Tax Expense Allocated to Each Component of Other Comprehensive Income
Income tax expense allocated to each component of other comprehensive income was as follows:
 
2013
millions
Before
Tax
Amount
 
Tax
Expense
 
Net of
Tax
Amount
Other comprehensive income
 
 
 
 
 
Pension and postretirement adjustments
 
 
 
 
 
Experience gain
$
362

 
$
(126
)
 
$
236

Less: amortization of prior service cost included in net period pension cost
193

 
(7
)
 
186

Pension and postretirement adjustments, net of tax
555

 
(133
)
 
422

Deferred gain on derivatives
2

 
—

 
2

Currency translation adjustments
(70
)
 
(1
)
 
(71
)
Total other comprehensive income
$
487

 
$
(134
)
 
$
353

 
2012
millions
Before
Tax
Amount
 
Tax (Expense) Benefit
 
Net of
Tax
Amount
Other comprehensive income
 
 
 
 
 
Pension and postretirement adjustments
 
 
 
 
 
Experience loss
$
(564
)
 
$
1

 
$
(563
)
Less: cost of settlements
454

 
—

 
454

Less: amortization of prior service cost included in net period pension cost
189

 
(6
)
 
183

Pension and postretirement adjustments, net of tax
79

 
(5
)
 
74

Deferred gain on derivatives
5

 
—

 
5

Currency translation adjustments
(8
)
 
13

 
5

Total other comprehensive income
$
76

 
$
8

 
$
84

 
2011
millions
Before
Tax
Amount
 
Tax (Expense) Benefit
 
Net of
Tax
Amount
Other comprehensive loss
 
 
 
 
 
Pension and postretirement adjustments
 
 
 
 
 
Experience loss
$
(872
)
 
$
14

 
$
(858
)
Less: amortization of prior service cost included in net period pension cost
72

 
(3
)
 
69

Pension and postretirement adjustments, net of tax
(800
)
 
11

 
(789
)
Deferred loss on derivatives
(6
)
 
—

 
(6
)
Currency translation adjustments
(57
)
 
19

 
(38
)
Total other comprehensive loss
$
(863
)
 
$
30

 
$
(833
)

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