Stock-Based Compensation

3 Months Ended

Jul. 01, 2011

Stock-Based Compensation

Stock-Based Compensation

3.  STOCK-BASED COMPENSATION

During the three-month period ended July 1, 2011, the Company granted equity compensation awards under the 2010 Equity Incentive Plan (the "2010 Plan"). For further discussion of the 2010 Plan, refer to Note 2, "Summary of Accounting Policies," of the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

The following table summarizes the Company's stock-based compensation expense:

	Three-Month Periods Ended
	July 1, 2011	July 2, 2010
	(In thousands)
Cost of sales	$           2,014	$           2,723
Selling, general and administrative expenses	10,263	11,767
Total stock-based compensation expense	$         12,277	$         14,490

For the three-month period ended July 1, 2011, the Company granted 399,800 stock options, at a weighted average fair value per option of $2.67.  Total unrecognized compensation expense related to stock options is $24.3 million, net of estimated forfeitures, and will be recognized over a weighted average vesting period of 1.4 years.

As of July 1, 2011, the number of options outstanding and exercisable was 52.9 million and 40.2 million, respectively, at weighted average exercise prices of $7.69 and $8.41, respectively.

The following table summarizes restricted share unit award activity for the Company's equity compensation plans during the three-month period ended July 1, 2011: 

	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested restricted share unit awards as of March 31, 2011	13,801,942	$        8.04
Granted	7,684,068	6.70
Vested	(1,650,212)	10.40
Forfeited	(1,816,685)	10.48
Unvested restricted share unit awards as of July 1, 2011	18,019,113	$        7.01

Of the 7.7 million restricted share unit awards granted during the three-month period ended July 1, 2011, approximately 1.5 million represents the target amount of grants made to certain key employees whereby vesting is contingent on meeting a certain market condition. The number of shares that ultimately will vest are based on a measurement of Flextronics's total shareholder return against the Standard and Poor's ("S&P") 500 Composite Index and will vest over a period of four years. The actual number of shares issued can range from zero to 2.2 million.  The grant-date fair value of these awards was estimated to be $7.78 per share and was calculated using a Monte Carlo simulation.  

During the three-month period ended July 1, 2011, approximately 158,000 restricted share unit awards were granted to certain key employees whereby vesting is contingent upon meeting both a service requirement and achievement of longer-term Company performance goals.

As of July 1, 2011, total unrecognized compensation expense related to unvested restricted share unit awards is $81.0 million, net of estimated forfeitures, and will be recognized over a weighted average vesting period of 3.3 years. Approximately $12.9 million of the unrecognized compensation cost is related to awards whereby vesting is contingent on meeting a certain market condition.