Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

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

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation consisted of the following:

	Three Months Ended
	March 31,
(In millions)	2015		2014
Stock-based compensation expense	$	0.9	$	1.6

We have stock-based compensation awards consisting of stock options, restricted stock and stock appreciation rights under four plans (collectively, the Stock Plans) which are described in detail in our 2014 Annual Report on Form 10-K. As of March 31, 2015, there were 1,273,822 shares available for grant under the 2011 Incentive Plan. No further shares were available for grant under any other stock incentive plan.

Stock Options

The following table summarizes our stock option activity:

	Stock Options		Weighted Average Exercise Price
Outstanding December 31, 2014	3,897,986		$	13.07
Granted	24,547		3.94
Exercised	—		—
Canceled	(113,753	)	19.80
Forfeited	(39,687	)	5.15
Outstanding March 31, 2015	3,769,093		$	12.89
Exercisable as of March 31, 2015	3,351,970		$	13.92

The outstanding options are non-qualified and generally have a term of ten years. The following table summarizes our weighted average assumptions used in the valuation of stock options:

	Three Months Ended
	March 31,
	2015		2014
Volatility	46.0	%	43.0	%
Risk-free interest rate	1.9	%	1.1	%
Expected life (months)	73		72
Dividend yield	—		—

As of March 31, 2015, there was $0.3 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 1.3 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, 2014	1,348,917		$	3.81
Granted	690,661		3.80
Grant adjustments	—		—
Vested	(332,069	)	3.74
Forfeited	(625	)	5.79
Nonvested as of March 31, 2015	1,706,884		$	3.82

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 March 31, 2015, there was $4.3 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 2.2 years.

Stock Appreciation Rights

During the three months ended March 31, 2015, we granted 2.7 million Stock Appreciation Rights (SARs) to certain employees associated with our Storage Solutions and Mobile Security operations. These awards were issued to incentivize employees to grow revenues. These awards expire on December 31, 2017 and only vest when both stock price and revenue performance conditions specified by the terms of the SARs are met. Additionally, the payout from the current plan reduces the payout from the prior plan if the employee received grants under both plans. For the stock price condition, based on the terms of the awards, 50 percent of the SARs may vest if the 30-day average Imation stock price reaches $8 per share or more by December 31, 2017 and the remaining 50 percent of the SARs may vest if the 30-day average Imation stock price reaches $12 per share or more by December 31, 2017. Additionally, for the revenue performance condition, as a condition necessary for vesting, the net revenue of Storage Solutions or Mobile Security (depending on the award) must reach certain specified stretch targets by December 31, 2017. 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 the stock price at the date of grant. As of March 31, 2015, we had 5.5 million SARs outstanding for which we have not recorded any related compensation expense based on the applicable accounting rules. We will continue to assess these SARs each quarter to determine if any expense should be recorded.