Stock-Based Compensation

9 Months Ended

Sep. 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 September 30, 2015, there were 2,639,265 shares remaining in the 2011 Plan for future grants.

During the nine months ended September 30, 2015, we granted 905,028 stock options at a weighted average exercise price of $55.63 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 nine months ended September 30, 2015, we granted 140,369 performance vesting share (“PVS”) awards at a weighted grant-date fair value of $55.26 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 nine months ended September 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 $3.6 million and $24.4 million for the three and nine months endedSeptember 30, 2015, respectively. Included in the amount for the nine months ended September 30, 2015 was a $10.4 million charge related to executive retirements, which was recorded within other expense, with the remainder of the balance recorded in selling, general and administrative expenses. Please refer to Note 11, Other Expense, for further discussion of this charge. For the three and nine months endedSeptember 30, 2014, total stock-based compensation expense was $3.6 million and $12.5 million, respectively.