NOTE 15. STOCK-BASED COMPENSATION PLANS

The Company's stock-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 (the "Compensation Committee") approves all awards that are granted under the Company's stock-based compensation plans. Stock-based compensation expense for the years ended August 31, 2014, 2013 and 2012 of $18.1 million, $18.7 million and $13.1 million, respectively, is mainly included in selling, general and administrative expenses on the Company's consolidated statements of operations. As of August 31, 2014, total unrecognized compensation cost related to unvested stock-based compensation arrangements was $24.4 million, which is expected to be recognized over a weighted-average period of three years, except for certain restricted stock units granted during fiscal 2014, which will vest over a weighted-average period of four years.

The following table summarizes the total awards granted:



	Stock Options/SARs	Restricted Stock Awards/Units	Performance Awards
2014 Grants	—	1,191,544	450,233
2013 Grants	244,403	1,149,696	640,002
2012 Grants	927,312	829,001	693,472

As of August 31, 2014, CMC had 15,286,763 shares available for future grants.

Restricted Stock Units

Restricted stock units issued under the Company's stock-based compensation 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.

Certain restricted stock units granted during fiscal 2014 will vest and either convert to CMC common stock or settle in cash after a specified service period; 25% vest two years from the date of grant; 25% vest three years from the date of grant and; the remaining 50% vest four years from the date of grant.

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 stock-based compensation 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 stockholder 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 stockholder 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 return on net assets ("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 stock units is remeasured each reporting period and is recognized ratably over the service period. At August 31, 2014, the Company reassessed the probability of achieving the specified performance conditions related to performance stock units awarded in fiscal 2012 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 was reversed in fiscal 2014.

In fiscal 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 did not meet the EBITDA and RONA targets at the end of the service period. In addition, the Compensation Committee determined that the Company did not meet the total stockholder return vesting criteria at the end of the performance period for performance stock units awarded in fiscal 2010. As a result, the compensation cost previously recognized for these performance stock units was reversed in fiscal 2013.

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 September 1, 2011	2,394,140		$	13.44
Granted	489,118		10.68
Vested	(773,947	)	13.90
Forfeited	(425,739	)	10.56
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
Granted	1,275,355		16.89
Vested	(737,870	)	13.55
Forfeited	(364,323	)	14.94
Outstanding as of August 31, 2014	2,080,580		$	15.37

The total fair value of shares vested during fiscal years 2014, 2013 and 2012 was $10.0 million, $7.2 million and $10.7 million, respectively.

The Company granted 390,562 equivalent shares of restricted stock units and performance stock units accounted for as liability awards during the year ended August 31, 2014. As of August 31, 2014, the Company had 1,617,014 equivalent shares of awards outstanding and expects 1,537,212 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. No stock appreciation rights or stock options were granted during the year ended August 31, 2014. Stock appreciation rights and stock options issued during the year ended August 31, 2013 and 2012 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 and 2012 of $0.6 million and $3.0 million, respectively, was estimated on the date of grant using the Black-Scholes Option Pricing Model with the following assumptions:



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

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, 2011	2,807,498		$	27.45
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
Granted	—		—
Exercised	(223,473	)	11.84
Forfeited/Expired	(992,926	)	32.93
Outstanding as of August 31, 2014	1,437,031		$	19.85	2.7	$	4,384,668
Exercisable at August 31, 2014	1,018,397		$	22.95	2.1	$	2,307,463
Remaining unvested stock appreciation rights and stock options expected to vest	397,703		$	12.32

The total intrinsic value of stock appreciation rights and stock options exercised during fiscal year 2014 was $1.7 million. The aggregate intrinsic value of stock appreciation rights and stock options exercised during fiscal 2013 and 2012 was not material.

Information related to stock appreciation rights and stock options as of August 31, 2014 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	868,245	3.7	$	12.30	456,081	3.2	$	12.34
$16.54	-	16.83	121,706	3.5	$	16.81	115,236	3.4	$	16.82
$32.82	-	35.38	447,080	0.7	$	35.36	447,080	0.7	$	35.36
			1,437,031	2.7	$	19.85	1,018,397	2.1	$	22.95

No cash-settled stock appreciation rights were granted during the year ended August 31, 2014. As of August 31, 2014, the Company had 104,589 equivalent shares of cash-settled stock appreciation rights outstanding and expects 99,360 equivalent shares of cash-settled stock appreciation rights to vest.

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.

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, 2014, 2013 and 2012. Yearly activity of the stock purchase plan is as follows:



	2014		2013		2012
Shares subscribed	228,780		281,460		299,210
Price per share	$	16.97	$	12.61	$	11.85
Shares purchased	221,570		211,580		198,300
Price per share	$	12.61	$	11.85	$	11.76
Shares available for future issuance	3,955,314