Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Stock compensation consisted of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2013		2012		2013		2012
Stock compensation expense	$	1.9	$	1.9	$	5.1	$	5.5

We have stock-based compensation awards consisting of stock options and restricted stock outstanding under five plans (collectively, the Stock Plans) which are described in detail in our 2012 Annual Report on Form 10-K. On May 8, 2013, at the Company's 2013 Annual Meeting of Shareholders, the Company's shareholders approved various amendments to our 2011 Stock Incentive Plan (2011 Incentive Plan) including increasing the number of shares of our common stock that may be issued pursuant to stock-based awards made under the 2011 Incentive Plan by 1,543,000 shares to a total of 6,043,000 shares. As of September 30, 2013 there were 2,082,057 shares available for grant under the 2011 Incentive Plan. No further shares were available for grant under any other stock incentive plan.

On September 24, 2013 we granted 2.9 million stock appreciation rights (SARs) under the 2011 Incentive Plan to certain employees associated with our Nexsan and Mobile Security operations. These awards expire in five years and only vest when both of the market and performance conditions specified by the terms of the SARs are met. For the market conditions, based on the terms of the awards, 50 percent of the SARs may vest if the 30-day average Imation stock price reaches $10 per share or more by December 31, 2016 and the remaining 50 percent of the SARs may vest if the 30-day average Imation stock price reaches $15 per share or more by December 31, 2016. Additionally, for the performance condition, as a condition necessary for vesting, the net revenue of Nexsan or Mobile Security (depending on the award) must reach certain specified stretch targets by December 31, 2016. If exercised, the SARs require a cash payment to the holder in an amount based on the Imation stock price at the date of exercise as compared to $4.03. As of September 30, 2013 we have not recorded any compensation expense associated with these SARs based on the applicable accounting rules. We will continue to assess these SARs each quarter to determine if any expense should be recorded.

Stock Options

The following table summarizes our stock option activity:

	Stock Options		Weighted Average Exercise Price
Outstanding December 31, 2012	5,818,472		$	16.57
Granted	1,034,406		3.85
Exercised	—		—
Canceled	(1,001,382	)	25.67
Forfeited	(382,493	)	7.22
Outstanding September 30, 2013	5,469,003		$	13.14
Exercisable as of September 30, 2013	3,411,153		$	17.65

The outstanding options are non-qualified and generally have a term of ten years. The weighted average grant date fair value of options that were granted for the nine months ended September 30, 2013 was $1.61 per award. The following table summarizes our weighted average assumptions used in the valuation of options:

	2013
Volatility	42.8	%
Risk-free interest rate	1.1	%
Expected life (months)	72
Dividend yield	—

As of September 30, 2013, there was $3.7 million of total unrecognized compensation expense related to non-vested stock options granted under our Stock Plans. That expense is expected to be recognized over a weighted average period of 1.6 years.

Restricted Stock

The following table summarizes our restricted stock activity:

	Restricted Stock		Weighted Average Grant Date Fair Value Per Share
Nonvested as of December 31, 2012	1,025,804		$	7.12
Granted	837,443		3.75
Vested	(511,796	)	7.22
Forfeited	(80,203	)	7.25
Nonvested as of September 30, 2013	1,271,248		$	4.86

The cost of the awards is determined using the fair value of the Company’s common stock on the date of the grant and compensation is recognized on a straight-line basis over the requisite vesting period.

As of September 30, 2013, there was $4.4 million of total unrecognized compensation expense related to non-vested restricted stock granted under our Stock Plans. That expense is expected to be recognized over a weighted average period of 1.5 years.