Note 22 — Share-Based Compensation

Under our 2009 Stock Incentive Plan, as amended and restated (“2009 Plan”), we have registered 13,000,000 shares of common stock for issuance. The 2009 Plan provides for issuance of nonqualified stock options, incentive stock options, stock appreciation rights, performance shares, performance units, restricted stock awards, restricted stock units and deferred stock units, any of which may be performance-based, and for incentive bonuses, which may be paid in cash or stock or a combination of both, to eligible employees, officers, non-employee directors and persons who have been retained to provide consulting, advisory or other services to Dole or any of its subsidiaries. The non-qualified stock options were time-based and expire 10 years from the grant date, three months after employee termination, one year after the date of an employees’ retirement or death, if earlier, or March 31, 2014, in the case of: (1) a category of employees who have a change of control agreement and whose employment with Dole will be terminating as a result of the sale transaction; and (2) a category of employees whose employment is continuing with ITOCHU or one of the acquired entities in the sale transaction, and who have accepted such continuing employment in writing with a release to Dole pursuant to the Acquisition Agreement. In addition, the stock options vest over a three year period, with shares becoming exercisable in equal annual installments of 33.3 percent. The restricted stock awards and restricted stock units are time-based and either vest at the end of a one-year period, vest over a three-year period in equal annual installments of 33.3 percent, or vest at the end of the three-year period. As of December 29, 2012, Dole had 7,340,046 shares of common stock available for future issuance of awards under the 2009 Plan. The shares of common stock to be issued under the 2009 Plan are made available from authorized and unissued Dole common stock.

Under the terms of Dole’s 2009 Plan, the sale of Dole Asia will result in a “change of control” as defined under the Plan, and as a result, the employees of Dole will immediately vest in their entire award, with no further service required beyond the date of the consummation of the sale of Dole Asia. As such, the requisite service period for all of the outstanding awards was originally based on the contractual vesting period of the awards, but now is based on the estimated closing date of the sale of Dole Asia given that Dole concluded in the fourth quarter of 2012 that the sale of Dole Asia was probable of occurring. Since the estimated requisite service period has been shortened to the estimated close date of the pending sale of Dole Asia, the recognition of the remaining unrecognized compensation cost will be accelerated on a prospective basis and will be recognized through the estimated close date of the sale of Dole Asia. As a result, we estimate that substantially all of the remaining unrecognized compensation associated with the outstanding awards granted under the 2009 Plan will be recognized during the first quarter of 2013.

Total share-based compensation expense recognized in the consolidated statements of operations was as follows:


	2012			2011			2010
	(In thousands)
Cost of products sold	$	88		$	111		$	35
Selling, marketing and general administrative expenses		10,693			7,814			5,961

Total share-based compensation for continuing operations		10,781			7,925			5,996
Estimated income tax benefit included in provision for income taxes		(3,121	)		(2,757	)		—

Total share-based compensation for continuing operations, net of estimated income tax benefits	$	7,660		$	5,168		$	5,996
Total share-based compensation for discontinued operations, net of estimated income tax benefits of ($291), ($197), $0		1,581			1,021			646

Total share-based compensation, net of estimated income tax benefits	$	9,241		$	6,189		$	6,642

Stock Options

A summary of stock option activity for fiscal 2012 was as follows:


	Shares Under Option (In thousands)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2011		3,719		$	10.41		8.9 years	$	—
Granted		—			—
Exercised		(381	)	$	9.50			$	934
Cancelled		—			—

Outstanding at December 29, 2012		3,338		$	10.52		7.9 years	$	4,073

Expected to vest in the future at December 29, 2012		1,220		$	9.24		8.6 years	$	2,488

Exercisable at December 29, 2012		2,062		$	11.31		7.4 years	$	1,471

The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of December 29, 2012 was approximately $4.8 million.

Dole estimates the fair value of share-based payments using the Black-Scholes-Merton option-pricing model, which was developed for use in determining the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including expected term, expected volatility, dividend yield, and risk free rate. Changes in the input assumptions can materially affect the fair value estimates and ultimately how much Dole recognizes as share-based compensation expense. No stock options were granted during 2012. The weighted average fair value per share of stock options granted during 2011 and 2010 were $4.02 and $4.33, respectively, as estimated at the date of grant. The weighted average input assumptions used and resulting fair values were as follows:


	2011			2010
Expected life (in years)		6			6
Risk-free interest rate		1.2	%		1.9	%
Expected volatility		45.7	%		44.2	%
Dividend yield		—			—

Restricted Stock Awards

A summary of restricted stock activity for fiscal 2012 was as follows:


	Shares (In thousands)			Weighted Average Grant Date Fair value		Weighted Average Remaining Contractual Life
Unvested at December 31, 2011		1,193		$	10.66		1.8 years
Granted		—			—
Vested		(477	)	$	12.50
Cancelled		(6	)	$	11.12

Unvested at December 31, 2011		710		$	9.42		1.4 years

Expected to vest in the future at December 29, 2012		674		$	9.42		1.4 years

The fair value of Dole’s restricted stock awards were estimated at the date of the grant. The grant date fair value is the stock price on the date of grant. The weighted average fair value per share of restricted stock awards granted during 2011 and 2010 were $9.11 and $9.74, respectively. The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of December 29, 2012 was approximately $2.9 million. The total fair value of the restricted stock awards vested during 2012, 2011 and 2010 was $6 million, $0.9 million and $0.9 million, respectively.

Restricted Stock Units

A summary of restricted stock unit activity for fiscal 2012 was as follows:


	Shares (In thousands)			Weighted Average Grant Date Fair value		Weighted Average Remaining Contractual Life
Unvested at December 31, 2011		180		$	9.96		2.2 years
Granted		—			—
Vested		(33	)	$	12.50
Cancelled		—			—

Unvested at December 29, 2012		147		$	9.39		1.5 years

Expected to vest in the future at December 29, 2012		140		$	9.39		1.5 years

The fair value of Dole’s restricted stock units were estimated at the date of the grant. The grant date fair value is the stock price on the date of grant. The weighted average fair value per share of restricted stock units granted during 2011 and 2010 were $9.14 and $9.74, respectively. The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of December 29, 2012 was approximately $0.6 million. The total fair value of the restricted stock units vested during 2012 was $0.4 million.

Performance Shares

A summary of performance shares activity for fiscal 2012 was as follows:


	Shares (In thousands)		Weighted Average Grant Date Fair value		Weighted Average Remaining Contractual Life
Unvested at December 31, 2011		183	$	14.45		2 years
Granted		229	$	10.11
Vested		—		—
Cancelled		—		—

Unvested at December 29, 2012		412	$	12.04		1.6 year

Expected to vest in the future at December 29, 2012		392	$	12.04		1.6 year

The fair value of Dole’s performance shares were estimated at the date of the grant. The grant date fair value is the stock price on the date of grant. The weighted average fair value per share of performance shares granted during 2011 was $14.45, no shares were granted in fiscal 2010. Each quarter Dole assesses the probability of vesting for the performance shares which is used to derive the compensation expense, and makes changes as needed. The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of December 29, 2012 was approximately $2.4 million.

The performance shares granted during 2012 represent performance shares given to employees during 2011 for which the performance metric was finalized during February 2012. During February 2012, the Corporate Compensation and Benefits Committee of the Board of Directors finalized the performance metric (net debt reduction, as defined), thereby establishing a grant date for accounting purposes. Under the terms of the performance share agreement, award recipients can receive up to 200% of the shares granted dependent upon achievement of the performance metric.