Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

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

Stock-Based Compensation

 Stock-Based Compensation

The 2011 Omnibus Incentive Compensation Plan (the "2011 Plan") provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. The terms and conditions of awards to be granted are determined by our Board's nominating and corporate governance and compensation committees. Vesting requirements vary by award. At June 30, 2015, there were 2,632,617 shares remaining in the 2011 Plan for future grants.

During the six months ended June 30, 2015, we granted 901,704 stock options at a weighted average exercise price of $55.62 per share based on the grant-date fair value of our stock to key employees under the 2011 Plan, including shares issued in conjunction with the Chief Executive Officer ("CEO") succession. The weighted average grant date fair value of options granted was $10.50 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of 1.61%; expected life of 5.8 years based on prior experience; stock volatility of 19.2% based on historical data; and a dividend yield of 0.9%. Stock option expense is recognized over the vesting period, net of forfeitures.

During the six months ended June 30, 2015, we granted 139,716 performance vesting share (“PVS”) awards at a weighted grant-date fair value of $55.25 per share to key employees under the 2011 Plan, including shares issued in conjunction with the CEO succession. Each PVS award entitles the holder to one share of our common stock if the annual growth rate of revenue and return on invested capital targets are achieved over a three-year performance period. Shares earned under PVS awards may vary from 0% to 200% of an employee’s targeted award. The fair value of PVS awards is based on the market price of our stock at the grant date and is recognized as expense over the performance period, adjusted for estimated target outcomes and net of forfeitures.

In addition, during the six months ended June 30, 2015, we granted 30,499 restricted share awards at a grant-date fair value of $57.38 per share to the new CEO under the 2011 Plan. The fair value of the award is based on the market price of our stock at the grant date and is recognized as expense over the vesting period.

Total stock-based compensation expense was $15.5 million and $20.8 million for the three and six months ended June 30, 2015, respectively. Included in these amounts was a $10.4 million charge related to executive retirements, which was recorded within other expense. Refer to Note 11, Other Expense, for further discussion of this charge. The remainder of stock-based compensation expense for the three and six months ended June 30, 2015 was recorded within selling, general and administrative expenses. For the three and six months ended June 30, 2014, total stock-based compensation expense was $4.6 million and $8.9 million, respectively.