Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation

Stock-Based Compensation

2. Stock-Based Compensation

The Company’s awards of stock-based compensation are in the form of stock options and restricted stock. The Company recorded stock-based compensation expense as follows (in millions):

	Three Months Ended March 31,
	2014		2013
Stock options	$	1.6	$	1.6
Restricted stock	0.4		0.2
Total stock-based compensation	$	2.0	$	1.8

Stock-based compensation expense is amortized on a straight-line basis over the underlying vesting terms of the stock-based award. Stock options to purchase the Company’s common stock are periodically awarded to executive officers and other employees of the Company subject to a vesting period of three to five years. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Assumptions regarding volatility, expected life, dividend yield and risk-free interest rates are required for the Black-Scholes model and are presented in the table below:

	2014	2013
Risk-free interest rates	1.81% - 2.04%	1.22% - 1.43%
Expected life	6.0 - 6.3 years	6.5 years
Volatility	55.5% - 56.2%	54.9%
Expected dividend yield	0.0%	0.0%

Bruker Corporation Stock Plan

In May 2010, the Bruker Corporation 2010 Incentive Compensation Plan (the “2010 Plan”) was approved by the Company’s stockholders. The 2010 Plan provides for the issuance of up to 8,000,000 shares of the Company’s common stock. The 2010 Plan allows a committee of the Board of Directors (the “Committee”) to grant incentive stock options, non-qualified stock options and restricted stock awards. The Committee has the authority to determine which employees will receive the awards, the amount of the awards and other terms and conditions of any awards. Awards granted by the Committee typically vest over a period of three to five years.

Stock option activity for the three months ended March 31, 2014 was as follows:

	Shares Subject to Options		Weighted Average Option Price		Weighted Average Remaining Contractual Term (Yrs)	Aggregate Intrinsic Value (in millions) (b)
Outstanding at December 31, 2013	4,877,564		$	13.12
Granted	99,200		19.52
Exercised	(291,140	)	10.28
Forfeited	(86,713	)	14.42
Outstanding at March 31, 2014	4,598,911		$	13.41	6.3	$	47.2
Exercisable at March 31, 2014	2,618,211		$	10.92	4.6	$	34.3
Excercisable and expected to vest at March 31, 2014 (a)	4,460,262		$	13.31	6.2	$	45.5

(a) In addition to the options that are vested at March 31, 2014, the Company expects a portion of the unvested options to vest in the future. Options expected to vest in the future are determined by applying an estimated forfeiture rate to the options that are unvested as of March 31, 2014.

(b) The aggregate intrinsic value is based on the positive difference between the fair value of the Company’s common stock price of $22.79 on March 31, 2014, or the date of exercises, as appropriate, and the exercise price of the underlying stock options.

Restricted stock activity for the three months ended March 31, 2014 was as follows:

	Shares Subject to Restriction		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2013	357,948		$	16.65
Vested	(1,375	)	16.57
Outstanding at March 31, 2014	356,573		$	16.65

At March 31, 2014, the Company expects to recognize pre-tax stock-based compensation expense of $15.0 million associated with outstanding stock option awards granted under the Company’s stock plans over the weighted average remaining service period of 2.5 years. In addition, the Company expects to recognize additional pre-tax stock-based compensation expense of $4.5 million associated with outstanding restricted stock awards granted under the Company’s stock plans over the weighted average remaining service period of 3.0 years.