NOTE 15. SHARE-BASED COMPENSATION PLANS

The Company's share-based compensation plans provide for the issuance of incentive and non-qualified stock options, restricted stock and units, stock appreciation rights and performance-based awards. The Compensation Committee of the Board of Directors approves all awards that are granted under the Company's share-based compensation plans. Share-based compensation expense for the years ended August 31, 2013, 2012 and 2011 of $18.7 million, $13.1 million and $12.9 million, respectively, is included in selling, general and administrative expenses on the Company’s consolidated statements of operations. As of August 31, 2013, total unrecognized compensation cost related to unvested share-based compensation arrangements was $26.5 million, which is expected to be recognized over a three year period.

The following table summarizes the total awards granted:



	Stock Options/SARs	Restricted Stock Awards/Units	Performance Awards
2013 Grants	244,403	1,149,696	640,002
2012 Grants	927,312	829,001	693,472
2011 Grants	112,000	690,180	686,548

As of August 31, 2013, the maximum number of shares available for awards under the Company's share-based compensation plans was 19,581,278. As of August 31, 2013, CMC had 17,781,754 shares available for future grants.

Restricted Stock Units Restricted stock units issued under the Company's plans provide that shares awarded may not be sold, transferred, pledged or assigned until service-based restrictions have elapsed. The restricted stock units granted to U.S. employees generally vest and are converted to CMC common stock in three equal installments on each of the first three anniversaries of the date of grant. The restricted stock units granted to non-U.S. employees generally vest and are settled in cash in three equal installments on each of the first three anniversaries of the date of grant. Generally, upon termination of employment, restricted stock awards that have not vested are forfeited. Upon death, disability or qualifying retirement a pro-rata portion of the unvested restricted stock awarded will vest and become payable.

The estimated fair value of the stock-settled restricted stock units is based on the closing price of CMC common stock on the date of grant, discounted for the expected dividend yield through the vesting period. Compensation cost related to the stock-settled restricted stock units is recognized ratably over the service period and is included in equity on the Company’s consolidated balance sheets. The fair value of the cash-settled restricted stock units is remeasured each reporting period and is recognized ratably over the service period. The liability related to the cash-settled restricted stock units is included in accrued expenses and other payables on the Company’s consolidated balance sheets.

Performance Stock Units Performance stock units issued under the Company’s plans provide that shares awarded may not be sold, transferred, pledged or assigned until service-based restrictions have elapsed and any performance objectives have been attained as established by the Compensation Committee. Recipients of these awards generally must be actively employed by and providing services to the Company on the last day of the performance period in order to receive an award payout. Upon death, disability or qualifying retirement a pro-rata portion of the performance stock units will vest and become payable at the end of the performance period.

Compensation cost for performance stock units is accrued based on the probable outcome of specified performance conditions, net of estimated forfeitures. The Company accrues compensation cost if it is probable that the performance conditions will be met. The Company reassesses the probability of meeting the specified performance conditions at the end of each reporting period and adjusts compensation cost, as necessary, based on the probability of achieving the performance conditions. If the performance conditions are not met at the end of the performance period, the Company reverses the related compensation cost.

Performance targets established by the Compensation Committee for performance stock units awarded in fiscal 2013 are weighted 75% based on the Company’s cumulative EBITDA targets for fiscal years 2013, 2014 and 2015, as approved by the Company’s Board of Directors in the respective year’s business plan, and 25% based on a three year relative total shareholder return metric. Performance stock units awarded to U.S. participants will be settled in CMC common stock. Award payouts range from a threshold of 50% to a maximum of 200% for each portion of the target awards. The performance stock units associated with the cumulative EBITDA targets have been classified as liability awards since the final EBITDA target will not be set until the third year of the performance period. Consequently, these awards are included in accrued expenses and other payables on the Company’s consolidated balance sheets. The fair value of these performance stock units is remeasured each reporting period and is recognized ratably over the service period. The performance stock units associated with the total shareholder return metric were valued at fair value on the date of grant using the Monte Carlo pricing model and are included in equity on the Company’s consolidated balance sheets.

Performance stock units awarded to non-U.S. participants in fiscal 2013 will be settled in cash. The fair value of the performance stock units is remeasured each reporting period and is recognized ratably over the service period. The liability related to these awards is included in accrued expenses and other payables on the Company’s consolidated balance sheets

Performance targets established by the Compensation Committee for performance stock units awarded in fiscal 2012 are weighted 50% based on the Company’s EBITDA targets and 50% based on Company's RONA targets for fiscal years 2012, 2013 and 2014, as approved by the Company's Board of Directors. Performance stock units awarded in fiscal 2012 will be settled in cash. Consequently, these awards are included in accrued expenses and other payables on the Company’s consolidated balance sheets. The fair value of the fiscal 2012 performance share units is remeasured each reporting period and is recognized ratably over the service period.

Performance targets established by the Compensation Committee for performance stock units awarded in fiscal 2011 are weighted 50% based on the Company’s EBITDA targets and 50% based on Company's RONA targets for fiscal years 2011, 2012 and 2013, as approved by the Company’s Board of Directors. Settlement of the performance stock units awarded in fiscal 2011 is split and upon vesting, award participants will receive one-half in CMC common stock and one-half in cash. The fair value of the portion of the performance stock units associated with the EBITDA target, and are settled in CMC common stock, was based on the closing price of CMC common stock on the date of grant discounted for the expected dividend yield through the vesting period. Compensation cost related to these performance stock units is recognized ratably over the service period and is included in equity on the Company’s consolidated balance sheets. The fair value of the performance share units settled in cash is remeasured each reporting period and is recognized ratably over the service period. The liability related to the cash settled portion of the performance stock units is included in accrued expenses and other payables on the Company’s consolidated balance sheets. At August 31, 2013, the Company reassessed the probability of achieving the specified performance conditions related to performance stock units awarded in fiscal 2011 and determined the Company will not meet the EBITDA and RONA targets at the end of the service period. As a result, the compensation cost previously recognized for these performance stock units has been reversed as of August 31, 2013.

Performance targets established by the Compensation Committee for performance stock units awarded in fiscal 2010 are based on a three year relative total shareholder return metric where 50% of the performance share units will vest if the Company ranks at the 50th percentile of its peer group at the end of the performance period and 100% of the performance share units will vest if the Company ranks at or greater than the 60th percentile of its peer group at the end of the performance period. In 2013, the Compensation Committee determined that the Company did not meet the total shareholder return vesting criteria at the end of the performance period. As a result, the compensation cost previously recognized for these performance stock units has been reversed.

Information for restricted stock units and performance stock units, excluding the cash component, is as follows:



	Number		Weighted Average Grant-Date Fair Value
Outstanding as of August 31, 2012	1,683,572		$	13.16
Granted	1,159,451		13.60
Vested	(537,303	)	13.35
Forfeited	(398,302	)	12.22
Outstanding as of August 31, 2013	1,907,418		$	13.57

The weighted-average grant-date fair value per share of restricted stock units and performance stock units was $10.68 and $15.55 for 2012 and 2011, respectively. The total fair value of shares vested during 2013, 2012 and 2011 was $7.2 million, $10.7 million and $2.9 million, respectively.

The Company granted 174,710 equivalent shares of cash-settled restricted stock units and performance stock units during the year ended August 31, 2013. As of August 31, 2013, the Company had 1,670,113 equivalent shares of awards outstanding and expects 1,378,779 equivalent shares to vest.

Stock Appreciation Rights and Stock Options Stock appreciation rights and stock options are awarded to certain employees with an exercise price equal to the market value of CMC common stock on the date of grant. Stock appreciation rights and stock options issued in fiscal 2013, 2012 and 2011 are exercisable ratably over the three year vesting period and have a contractual term of seven years. The estimated fair value of stock appreciation rights and stock options granted under the Company’s plans during the years ended August 31, 2013, 2012 and 2011 was $0.6 million, $3.0 million and $1.9 million, respectively was estimated on the date of grant using the Black-Scholes Option Pricing Model with the following assumptions:



	2013			2012			2011
Risk-free interest rate	0.41		%	0.43		%	0.59		%
Expected life, years	3.0			3.0			2.0
Expected volatility	43		%	59		%	56		%
Expected dividend yield	3.40		%	4.14		%	2.85		%
Weighted average grant-date fair value per share	$	3.38		$	3.67		$	4.63

Combined activity for the Company’s stock appreciation rights and stock options, excluding the cash component, is as follows:



	Number		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of September 1, 2010	3,922,016		$	23.67
Granted	112,000		16.83
Exercised	(854,023	)	8.03
Forfeited/Expired	(372,495	)	28.96
Outstanding as of August 31, 2011	2,807,498		$	27.45	2.8	$	94,500
Granted	828,463		11.63
Exercised	(361,478	)	12.34
Forfeited/Expired	(343,991	)	27.78
Outstanding as of August 31, 2012	2,930,492		$	24.81	3.3	$	1,104,590
Granted	185,004		14.25
Exercised	(4,105	)	11.60
Forfeited/Expired	(457,961	)	24.91
Outstanding as of August 31, 2013	2,653,430		$	24.07	2.8	$	2,867,175
Exercisable at August 31, 2013	1,756,862		$	30.15	1.5	$	666,807
Remaining unvested stock appreciation rights and stock options expected to vest	851,740		12.18

There was no intrinsic value of stock appreciation rights and stock options exercised during 2013. The aggregate intrinsic value of stock appreciation rights and stock options exercised during 2012 and 2011 was $0.4 million and $7.4 million, respectively and represents the difference between the market value on the date of exercise and the exercise price.

Information related to stock appreciation rights and stock options as of August 31, 2013 is summarized below:



			Stock Appreciation Rights and Stock Options Outstanding				Stock Appreciation Rights and Stock Options Exercisable
Range of Exercise Prices			Number Outstanding	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price
$11.00	-	14.68	1,161,224	4.8	$	12.20	274,362	3.1	$	12.45
$16.54	-	16.83	121,706	4.5	$	16.81	112,000	4.4	$	16.83
$31.75	-	35.38	1,370,500	1.0	$	34.78	1,370,500	1.0	$	34.78
			2,653,430	2.8	$	24.07	1,756,862	1.5	$	30.15

During the year ended August 31, 2013, the Company awarded 59,399 equivalent shares of stock appreciation rights to non-U.S. employees, which are settled in cash. The fair value of these stock appreciation rights is remeasured each reporting period and is recognized ratably over the service period. The liability related to these awards is included in accrued expenses and other payables on the Company’s consolidated balance sheets. As of August 31, 2013, the Company had 141,340 equivalent shares of stock appreciation rights outstanding and expects 134,273 equivalent shares of stock appreciation rights to vest.

Stock Purchase Plan Almost all U.S. resident employees with one year of service at the beginning of each calendar year may participate in the Company's employee stock purchase plan. Each eligible employee may purchase up to 400 shares annually. The Board of Directors establishes the purchase discount of 15% based on market prices on specified dates for the years ended August 31, 2013, 2012 and 2011. Yearly activity of the stock purchase plan is as follows:



	2013		2012		2011
Shares subscribed	281,460		299,210		339,620
Price per share	$	12.61	$	11.85	$	14.34
Shares purchased	211,580		198,300		357,180
Price per share	$	11.85	$	11.76	$	13.63
Shares available for future issuance	4,134,634