Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

Stockholders' Equity

(15) Stockholders’ Equity

Quarterly Cash Dividends

On April 11, 2013, our Board of Directors declared a quarterly cash dividend of $0.13 per common share payable on June 21, 2013 to stockholders of record at the close of business on June 7, 2013. The estimated amount of this dividend payment is $25 million based on 196 million shares of our common stock issued and outstanding as of March 31, 2013.

On February 14, 2013, our Board of Directors declared a quarterly cash dividend of $0.13 per common share payable on March 15, 2013 to stockholders of record at the close of business on March 1, 2013. We used $25 million of available cash to pay this quarterly cash dividend.

The dividend payments discussed above are recorded as reductions to cash and cash equivalents and retained earnings on our condensed consolidated balance sheets. Our credit facility and the Notes contain covenants that restrict our ability to declare or pay dividends. However, we do not believe these covenants are likely to materially limit the future payment of quarterly cash dividends on our common stock. From time to time, we may consider other means of returning value to our stockholders based on our consolidated financial condition and results of operations. There is no guarantee that our Board of Directors will declare any further dividends.

Stock Appreciation Rights (“SARs”)

In connection with the acquisition of Diversey, Sealed Air exchanged Diversey’s cash-settled stock appreciation rights and stock options that were unvested as of May 31, 2011 and unexercised at October 3, 2011 (the date of acquisition ) into cash-settled stock appreciation rights based on Sealed Air common stock. As of March 31, 2013, we had 3 million SARs outstanding and the weighted average remaining vesting life of outstanding SARs was slightly greater than one year.

Since these SARs are settled in cash, the amount of the related expense has fluctuated and the related future expense will fluctuate based on exercise and forfeiture activity and the changes in the assumptions used in a Black-Scholes valuation model which include Sealed Air’s stock price, risk-free interest rates, expected volatility and a dividend yield. In addition, once vested, the related expense will continue to fluctuate due to the changes in the assumptions used in the Black-Scholes valuation model for any SARs that are not exercised until their respective expiration dates, the last of which is currently in March 2021.

We recognized SARs expense of $18 million in the three months ended March 31, 2013 and $12 million in the three months ended March 31, 2012, related to SARs that were granted to Diversey employees who remained employees as of March 31, 2013 and 2012, respectively. Cash payments due to the exercise of these SARs in the three months ended March 31, 2013 were $17 million. As of March 31, 2013, the remaining liability for these SARs was $42 million and is included in other current ($15 million) and non-current liabilities ($27 million) on the condensed consolidated balance sheet and we had 3 million SARs outstanding. The weighted average remaining vesting life of outstanding SARs was slightly greater than one year.

In addition to the amounts discussed above, we recognized restructuring expense of less than $1 million in the three months ended March 31, 2013 for SARs payments that were part of the termination and benefit costs for employees under the 2011 – 2014 Integration & Optimization Program. This expense was included in restructuring and other (credits) charges in our condensed consolidated statements of operations. Cash payments upon the exercise of these SARs were $2 million in the three months ended March 31, 2013. The remaining liability for SARs included in the restructuring program was less than $1 million as of March 31, 2013.

Share-based Incentive Compensation

We record share-based incentive compensation expense in selling, general and administrative expenses on our condensed consolidated statements of operations with a corresponding credit to additional paid-in capital within stockholders’ equity based on the fair value of the share-based incentive compensation awards at the date of grant. We recognize an expense or credit reflecting the straight-line recognition, net of estimated forfeitures, of the expected cost of the program. For the various performance share unit (“PSU”) awards programs, the cumulative amount accrued to date is adjusted up or down to the extent the expected performance against the targets has improved or worsened for the performance conditions components of the awards.

The following table shows our total share-based incentive compensation expense.

	Three Months Ended
	March 31,
	2013		2012
Total share-based incentive compensation expense(1) (2)	$	7.6	$	4.5

The following table shows the estimated amount of total share-based incentive compensation expense expected to be recognized on a straight-line basis over the remaining respective vesting periods at March 31, 2013.

	2013		2014		2015		2016		Total
Total share-based incentive compensation expense (1)	$	18.1	$	15.2	$	8.2	$	0.2		$	41.7

⁽¹⁾  The amounts included above do not include the expense related to our U.S. profit sharing contributions made in the form of our common stock as such contributions are not considered share-based incentive compensation.

⁽²⁾  On February 28, 2013, the Organization and Compensation Committee of our Board of Directors (“O&C Committee”) approved a change in the vesting policy regarding the existing 2011 three-year PSU awards, and the newly granted 2013 three-year PSU awards, for William V. Hickey, our former Chief Executive Officer. The approved change will result in the full vesting of the awards, rather than a pro-rata portion vesting as of the date of his retirement (May 16, 2013). Mr. Hickey’s awards will still be subject to the performance metrics stipulated in the plan documents, and will be paid-out in accordance with the original planned timing. As a result of these approved changes, the expense related to these awards will be accelerated and recognized over the applicable service period up until the date of his retirement). In the three months ended March 31, 2013, we recognized $1 million of share-based compensation expense related to these awards.

Accumulated Other Comprehensive Loss

Included in stockholders’ equity on our condensed consolidated balance sheets is accumulated other comprehensive loss. Accumulated other comprehensive loss includes unrecognized pension items of $137 million as of March 31, 2013.

In the three months ended March 31, 2013, we reclassified $7 million ($5 million, net of taxes) out of accumulated other comprehensive income to other assets and other liabilities on the condensed consolidated balance sheets. Also, see Note 15, “Profit Sharing, Retirement Savings Plans and Defined Benefit Plans,” of the Notes to the Consolidated Financial Statements included in our 2012 Annual Report on Form 10-K for additional information related to unrecognized pension items included in accumulated other comprehensive loss.

Performance-Based Compensation Program

The goals and achievement levels described below are designed to meet the requirements of Section 162(m) of the Internal Revenue Code in order to qualify the compensation paid to the Chief Executive Officer and other specified executive officers named in the summary compensation table in the Company’s proxy statement to be fully deductible as performance-based compensation even if compensation exceeds the $1 million limit of Section 162(m).

During the three months ended March 31, 2013, the O&C Committee approved the following goals and achievement levels under the Performance-Based Compensation Program of Sealed Air Corporation in order to allow the O&C Committee to approve cash bonuses and stock awards up to the limit provided in the Program for 2013. The goals and achievement levels for 2013 are diluted earnings per share (adjusted as describe below) of at least $0.95 per share, operating expenses (as adjusted) equal to or less than $1,993 million, net operating profit after tax (as adjusted) of at least $511 million and either net income (as adjusted) above $200 million, operating profit as a percentage of 2013 net sales equal to or above 8.7% or gross margin as a percentage of 2013 net sales equal to or above 33.5%.

The results will be adjusted for specified restructuring charges, goodwill impairment, specified litigation-related costs, capital market transactions, specified acquisitions and dispositions, specified tax adjustments and specified information systems expenses.