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STOCK-BASED COMPENSATION
12 Months Ended
Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION
(18) STOCK-BASED COMPENSATION
Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. Pre-tax stock-based compensation expense was $48.7 million, $28.5 million and $19.5 million for the years ended June 30, 2016, 2015 and 2014, respectively, with a resulting deferred tax benefit of $18.5 million, $10.8 million and $7.4 million, respectively, calculated at a rate of 38%, which represents the expected effective income tax rate at the time of the compensation expense deduction and differs from the Company's current effective income tax rate due to enacted state income tax rate changes.
At June 30, 2016, there was $31.0 million of unrecognized stock-based compensation expense related to non-vested awards that will be amortized over 1.88 years.
Premier 2013 Equity Incentive Plan
The Premier 2013 Equity Incentive Plan (the "2013 Equity Incentive Plan") provides for grants of up to 11,260,783 shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance awards. As of June 30, 2016, there were 5,493,425 shares available for grant under the 2013 Equity Incentive Plan.
Restricted Stock
Restricted stock units ("RSU") and restricted stock awards ("RSA") issued and outstanding generally vest over a three-year period for employees and a one-year period for directors. The following table includes information related to restricted stock unit awards for the year ended June 30, 2016:
 
Number of Shares
Weighted Average Fair Value at Grant Date
Outstanding at June 30, 2015
819,091

$
28.15

Granted
255,780

$
35.10

Vested
(630,818
)
$
27.17

Forfeited
(40,936
)
$
30.33

Outstanding at June 30, 2016
403,117

$
33.86


At June 30, 2016, there was $8.1 million of unrecognized stock-based compensation expense related to non-vested awards that will be amortized over 1.93 years.
Performance Share Awards
Performance share awards issued and outstanding generally vest over three years if performance targets are met. The following table includes information related to performance share awards for the year ended June 30, 2016:
 
Number of Shares
Weighted Average Fair Value at Grant Date
Outstanding at June 30, 2015
1,091,868

$
28.19

Granted
380,349

$
35.50

Vested (a) 

$

Forfeited
(28,509
)
$
32.93

Outstanding at June 30, 2016
1,443,708

$
30.02


(a)
As of June 30, 2016, 815,016 performance shares vested but were subject to approval by the Compensation Committee of the Company's Board of Directors. These shares were included in the number of awards outstanding at June 30, 2016. The distribution of vested shares was approved on August 10, 2016 and distributed on August 23, 2016, on which date the classification of the shares was changed from outstanding to vested.
At June 30, 2016, there was $12.2 million of unrecognized stock-based compensation expense related to performance share awards that will be amortized over 1.84 years.
Stock Options
Stock options have a term of 10 years from the date of grant. Vested stock options will expire either after 12 months of an employee's termination with Premier or immediately upon an employee's termination with Premier, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years. The following table includes information related to stock options for the year ended June 30, 2016:
 
Number of Options
Weighted Average Exercise Price
Outstanding at June 30, 2015
2,643,078

$
28.24

Granted
863,717

$
35.47

Exercised
(129,458
)
$
27.44

Forfeited
(62,676
)
$
34.16

Outstanding at June 30, 2016
3,314,661

$
30.04

 
 
 
Outstanding and exercisable at June 30, 2016
2,074,973

$
27.51


The aggregate intrinsic value of stock options outstanding at June 30, 2016 and 2015 was $11.3 million and $27.0 million, respectively. The aggregate intrinsic value of stock options outstanding and exercisable at June 30, 2016 and 2015 was $10.8 million and $15.0 million, respectively. At June 30, 2016 and 2015, the aggregate intrinsic value of stock options expected to vest was $0.5 million and $12.0 million, respectively. The intrinsic value of stock options exercised during the year ended June 30, 2016 and 2015 was $0.8 million and $0.5 million, respectively. There were no stock options exercised during the year ended June 30, 2014.
At June 30, 2016, there was $10.7 million of unrecognized stock-based compensation expense related to stock options that will be amortized over 1.91 years.
The Company estimates the fair value of each stock option on the date of grant using a Black-Scholes option pricing model, applying the following assumptions, and amortizes expense over the option's vesting period using the straight-line attribution approach:
 
June 30,
 
2016
2015
2014
Expected life (a)
6 years
6 years
6 years
Expected dividend (b)
Expected volatility (c)
32.7% - 33.5%
34.8% - 39.5%
42.0%
Risk-free interest rate (d)
1.15% - 1.82%
1.66% - 1.89%
1.71%
Weighted average option grant date fair value
$11.11 - $12.40
$12.82 - $14.15
$11.46
(a)
The six-year expected life (estimated period of time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of Premier's employees.
(b)
No dividends are expected to be paid over the contractual term of the stock options granted, resulting in the use of a zero expected dividend rate.
(c)
The expected volatility rate is based on the observed historical volatilities of comparable companies.
(d)
The risk-free interest rate was interpolated from the five-year and seven-year United States Treasury constant maturity market yield as of the date of the grant.