Stock-Based Compensation
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Sep. 26, 2014
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We maintain various compensation plans for officers, other employees, and non-employee members of our Board of Directors. Stock-based compensation expense included in selling, general and administrative expenses related to stock options on a straight-line, single-award basis, restricted stock awards, restricted stock units and performance stock units included in the accompanying Consolidated Statements of Income were as follows (U.S. dollars in millions):
We realized an excess share-based payment deduction resulting from stock options exercised through a reduction in taxes currently payable and related effect on cash flows of $0.1 million and less than $0.1 million for the nine months ended September 26, 2014 and September 27, 2013. Proceeds of $34.8 million and $41.1 million were received from the exercise of stock options for the nine months ended September 26, 2014 and September 27, 2013, respectively. On April 30, 2014, our shareholders approved and ratified the 2014 Omnibus Share Incentive Plan (the “2014 Plan”). The 2014 Plan allows the Company to grant equity-based compensation awards, including stock options, restricted stock awards, restricted stock units ("RSUs") and performance stock units ("PSUs"). Under the 2014 Plan, the Board of Directors is authorized to award up to 3,000,000 ordinary shares. The 2014 Plan replaces and supersedes the 2011 Omnibus Share Incentive Plan (the "2011 Plan"), the 2010 Non-Employee Directors Equity Plan, and the Amended and Restated 1999 Share Incentive Plan (the "1999 Plan"), collectively referred to as Prior Plans. Stock Option Awards Under the 2014 Plan and Prior Plans, 20% of the options usually vest immediately, and the remaining options vest in equal installments over the next four years. Options under the 2014 Plan and Prior Plans may be exercised over a period not in excess of 10 years from the date of the grant. Prior Plan provisions are still applicable to outstanding options and awards under those plans. We disclosed the significant terms of the Prior Plans in our annual financial statements included in our Annual Report on Form 10-K for the year ended December 27, 2013. The following table lists the various stock option grants from our 2014 Plan and Prior Plans for the nine months ended September 26, 2014 and September 27, 2013:
(1) Options granted under the 2014 Plan based on daily closing stock prices. (2) Option granted under the 2011 Plan based on daily closing stock prices. (3) Option granted under the 1999 Plan based on daily average of high and low stock prices. 7. Stock-Based Compensation (continued) The fair value for stock options was estimated at the date of grant using the Black-Scholes option pricing model, which requires us to make certain assumptions. Volatility is estimated based on the historical volatility of our stock over the past five years. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of grant. The dividend yield is estimated over the expected term based on our dividend policy, historical cash dividends and expected future cash dividends. The expected term of grant was based on the contractual term of the stock option and expected employee exercise and post-vesting employment termination trends. Forfeitures are estimated based on historical experience. Restricted Stock Awards A share of “restricted stock” is one of our ordinary shares that has restrictions on transferability until certain vesting conditions are met. We disclosed the significant terms of the Prior Plans in our annual financial statements included in our Annual Report on Form 10-K for the year ended December 27, 2013. No restricted stock has been issued under the 2014 Plan. For restricted stock awards under Prior Plans, 50% of each award of our restricted stock vested on the date it was granted. The remaining 50% of each award vests upon the six-month anniversary of the date on which the recipient ceases to serve as a member of our Board of Directors. Restricted stock awarded during the quarters and nine months ended September 26, 2014 and September 27, 2013 allows directors to retain all of their awards once they cease to serve as a member of our Board of Directors and is considered a nonsubstantive service condition in accordance with the guidance provided by the ASC on “Compensation – Stock Compensation”. Accordingly, it is appropriate to recognize compensation cost immediately for restricted stock awards granted to non-management members of the Board of Directors. The following table lists the various restricted stock awards and related compensation expense under Prior Plans for the quarters and nine months ended September 26, 2014 and September 27, 2013 (U.S. dollars in millions except share and per share data):
Restricted Stock Units / Performance Stock Units Each RSU/PSU represents a contingent right to receive one of our ordinary shares. The PSUs are subject to meeting minimum performance criteria set by our Compensation Committee of our Board of Directors. The actual number of shares the recipient receives is determined based on the results achieved versus performance goals. Those performance goals are based on exceeding a measure of our earnings. Depending on the results achieved, the actual number of shares that an award recipient receives at the end of the period may range from 0% to 100% of the award units granted. Provided such criteria are met, the PSU will vest in three equal annual installments on each of the next three anniversary dates provided that the recipient remains employed with us. RSUs/PSUs do not have the voting rights of ordinary shares, and the shares underlying the RSUs/PSUs are not considered issued and outstanding. However, shares underlying RSUs/PSUs are included in the calculation of diluted earnings per share to the extent the performance criteria are met. 7. Stock-Based Compensation (continued) The following table lists the various RSUs/PSUs awarded under the 2014 Plan and Prior Plans for the quarters and nine months ended September 26, 2014 and September 27, 2013 (U.S. dollars in millions except share and per share data):
RSUs/PSUs are eligible to earn Dividend Equivalent Units ("DEUs") equal to the cash dividend paid to ordinary shareholders. DEUs are subject to the same performance and/or service conditions as the underlying RSUs/PSUs and are forfeitable. On March 28, 2014, May 30, 2014 and September 5, 2014, we awarded 2,014, 1,893 and 2,668 DEUs with a grant date price of $27.12, $28.97 and $32.33 per share, respectively. We expense the fair market value of RSUs/PSUs, as determined on the date of grant, ratably over the vesting period provided the performance condition, if any, is probable of attaining. Of the 311,000 RSUs awarded on July 30, 2014, 20.0% vested on the award date and the remaining will vest 20.0% on each of the next four anniversary dates. The following table lists the compensation expense related to RSUs/PSUs for the quarters and nine months ended September 26, 2014 and September 27, 2013 (U.S. dollars in millions).
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