Stockholders' Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Repurchase of Common Stock

In July 2015, our Board of Directors authorized a repurchase program of up to $1.5 billion of the Company’s common stock, reflecting its commitment to return value to shareholders. The repurchase program has no expiration date and replaced the previously authorized program, which was terminated. Refer to Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” for further information.  This program replaced our prior share repurchase program, approved by our Board of Directors in August 2007 authorizing us to repurchase in the aggregate up to 20 million shares of our outstanding common stock.

In March 2017, our Board of Directors authorized an increase to the existing share repurchase program by up to an additional $1.5 billion of the Company’s common stock. With this increase the total authorization for future repurchases is approximately $1.9 billion as of June 30, 2017.

During the three and six months ended June 30, 2017, we repurchased 3,536,308 shares, for approximately $155.3 million. During the three and six months ended June 30, 2016, we repurchased 435,140 and 1,134,485 shares, for approximately $20.0 million and $52.0 million, respectively. These repurchases were made under privately negotiated or open market transactions in accordance with Rule 10b5-1 of the Securities Act of 1933, as amended, and pursuant to the share repurchase program previously approved by our Board of Directors.

In May 2017, the Company entered into an accelerated share repurchase agreement with a third-party financial institution to repurchase up to $150.0 million of the Company’s common stock. Through June 30, 2017, the Company had received a total of 2,235,677 shares. When the program concluded in July 2017, the Company received an additional 679,278 shares and the notional program size was reduced to $129.6 million.  Over the life of the transaction, shares were repurchased at an average price of $44.47 per share.

Dividends

On May 18, 2017, our Board of Directors declared a quarterly cash dividend of $0.16 per common share, or $30.6 million, which was paid on June 16, 2017, to stockholders of record at the close of business day June 2, 2017.

On July 7, 2017, our Board of Directors declared a quarterly cash dividend of $0.16 per common share. The dividend is payable on September 15, 2017 to stockholders of record at the close of business on September 1, 2017.

The dividends paid in the six months ended June 30, 2017 were recorded as a reduction to cash and cash equivalents and retained earnings on our Condensed Consolidated Balance Sheets. Our credit facility and our 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 Condensed Consolidated Statement of Operations. There is no guarantee that our Board of Directors will declare any further dividends.

Share-based Incentive Compensation

We record share-based incentive compensation expense in selling, general and administrative expenses and cost of sales 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 PSU awards programs described below, the cumulative amount accrued to date is adjusted up or down to the extent the expected performance against the targets has improved or worsened.

The table below shows our total share-based incentive compensation expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2017		2016		2017		2016
Total share-based incentive compensation expense (1)(2)	$	13.7	$	17.0	$	25.3	$	32.0

⁽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 or the expense or income related to SARs and certain cash-based awards, however, the amounts include the expense related to share based awards that are settled in cash.

⁽²⁾  Of the consolidated share-based incentive compensation expense, $2.7 million and $6.2 million for the three and six months ended June 30, 2017, respectively, and $2.8 million and $6.2 million for the three and six months ended June 30, 2016, respectively, were allocated to net earnings from discontinued operations, net of tax on the Condensed Consolidated Statement of Operations.

Performance Share Unit (“PSU”) Awards

During the first 90 days of each year, the Organization and Compensation (“O&C”) Committee of our Board of Directors approves PSU awards for our executive officers and other selected key executives, which include for each officer or executive a target number of shares of common stock and performance goals and measures that will determine the percentage of the target award that is earned following the end of the three-year performance period. Following the end of the performance period, in addition to shares, participants will also receive a cash payment in the amount of the dividends (without interest) that would have been paid during the performance period on the number of shares that they have earned. Each PSU is subject to forfeiture if the recipient terminates employment with the Company prior to the end of the three years award performance period for any reason other than death, disability or retirement. In the event of death, disability or retirement, a participant will receive a prorated payment based on such participant’s number of full months of service during the award performance period, further adjusted based on the achievement of the performance goals during the award performance period. All of these PSUs are classified as equity in the Condensed Consolidated Balance Sheet.

2017 Three-year PSU Awards

In March 2017, the O&C Committee approved awards with a three-year performance period beginning January 1, 2017 to December 31, 2019 for certain executives. The O&C Committee established principal performance goals, which are (i) total shareholder return (TSR) weighted at 34%, (ii) 2019 consolidated adjusted EBITDA margin weighted at 33%, and (iii) Net Sales Compound Average Growth Rate in 2019 based on 2016 Net Sales weighted at 33%. The total number of shares to be issued for these awards can range from zero to 200% of the target number of shares.

The number of PSUs granted and the grant date fair value of the PSUs are shown in the following table:

	TSR		Net Sales CAGR		Adjusted EBITDA
Number of units granted	100,958		99,522		99,522
Fair value on grant date(1)	$	46.07	$	45.36	$	45.36

⁽¹⁾  Certain grants of the 2017 Three-year PSU awards were modified during the three months ended June 30, 2017. The impact to our total share-based incentive compensation expense and Condensed Consolidated Statement of Operations is not material.

The assumptions used to calculate the grant date fair value of the PSUs based on TSR are shown in the following table:

	TSR portion of the 2017 PSU Award
Expected price volatility	25.0	%
Risk-free interest rate	1.6	%

2014 Three-year PSU Awards

In February 2017, the O&C Committee reviewed the performance results for the 2014-2016 PSUs. Performance goals for these PSUs were based on Adjusted EBITDA margins and relative TSR. Based on overall performance for 2014-2016 PSUs, these awards paid out at 196% of target or 636,723 units.

2014 Special PSU Awards

In February 2017, the O&C Committee reviewed the performance results for the first tranche of the 2014 Special PSUs. The performance goal for the Special PSUs was based on Adjusted Free Cash Flow with potential cancellation or reduction based on 2016 Adjusted EPS and relative TSR. The overall performance for Special PSUs was above maximum achievement levels and as a result these awards paid out at 200% of target or 749,653 share-settled units. The remaining 50% of the award will be issued in the first quarter of 2018 contingent on the final performance goal of working capital as a percentage of 2017 Net Trade Sales.