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Share-Based Compensation
3 Months Ended
Mar. 31, 2014
Share-Based Compensation

8. Share-Based Compensation

The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and directors, including stock options, restricted stock units and performance share units. The total compensation expense related to all share-based compensation plans was $3.8 million and $4.0 million for the three months ended March 31, 2014 and 2013, respectively.  

 

Stock Options

There were no options granted during the three months ended March 31, 2014 and 2013.

Stock option awards as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

 

 

 

Shares Under Option
(thousands)

 

 

Weighted
Average
Exercise
Price

 

  

Weighted
Average
Remaining
Contractual
Term
(years)

 

  

Aggregate
Intrinsic
Value
(millions)

 

Outstanding at December 31, 2013

 

4,139

  

 

$

19.39

 

  

 

5.6

 

  

$

21.2

  

Exercised

 

(118

)

 

 

10.39

 

 

 

 

 

 

 

 

 

Cancelled/forfeited/expired

 

(109

)

 

 

27.92

 

  

 

 

 

  

 

 

 

Outstanding at March 31, 2014

 

3,912

  

 

 

19.43

 

  

 

5.5

 

  

 

14.8

  

Vested and expected to vest at March 31, 2014

 

3,885

  

 

 

19.47

 

  

 

5.4

 

  

 

14.7

  

Exercisable at March 31, 2014

 

1,395

  

 

$

9.05

 

  

 

5.9

 

  

$

12.4

  

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on March 31, 2014 and December 31, 2013, respectively, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on March 31, 2014 and December 31, 2013. This amount will change in future periods based on the fair market value of the Company’s stock and the number of options outstanding. Total intrinsic value of options exercised for the three months ended March 31, 2014 was $1.0 million. There were no options exercised during the three months ended March 31, 2013. Excess tax benefits on stock option exercises, shown as financing cash inflows in the Condensed Consolidated Statements of Cash Flows were $0.3 million for the three months ended March 31, 2014.

Compensation expense related to stock options for the three months ended March 31, 2014 and 2013 was $0.3 million and $0.4 million, respectively. As of March 31, 2014, $1.4 million of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted average period of 1.8 years.

 

 

Restricted Stock Units

Nonvested restricted stock unit awards as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

 

 

Shares
(thousands)

 

 

Weighted
Average Grant
Date Fair Value

 

Nonvested at December 31, 2013

 

2,495

  

 

$

11.97

  

Granted

 

582

  

 

 

16.82

  

Vested

 

(1,020

 

 

13.59

  

Forfeited

 

(3

 

 

16.43

  

Nonvested at March 31, 2014

 

2,054

  

 

$

12.53

  

Compensation expense related to restricted stock units for the three months ended March 31, 2014 and 2013 was $2.9 million and $3.2 million, respectively. As of March 31, 2014, there was $21.1 million of unrecognized share-based compensation expense related to approximately 1.9 million of restricted stock unit awards, with a weighted average grant date fair market value of $12.54, that are expected to vest over a weighted average period of 2.6 years. The fair value of these awards was determined based on the Company’s stock price on the grant date reduced by the present value of expected dividends through the vesting period.

Excess tax benefits on restricted stock units that vested, shown as financing cash inflows in the Condensed Consolidated Statements of Cash Flows, were $2.2 million and $1.3 million for the three months ended March 31, 2014 and 2013, respectively.

Performance Share Units

Nonvested performance share unit awards as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

 

 

Shares
(thousands)

 

  

Weighted
Average Grant

 Date Fair Value

 

Nonvested at December 31, 2013

 

953

  

  

$

10.81

  

Granted

 

319

  

  

 

16.46

  

Expired

 

(114

)

  

 

15.54

  

Vested

 

(121

)

 

 

15.54

 

Nonvested at March 31, 2014

 

1,037

  

  

$

11.48

  

During the three months ended March 31, 2014, 319,000 performance share unit awards were granted to certain executive officers, payable upon the achievement of certain established performance targets. The performance period for the shares awarded is January 1, 2014 through December 31, 2016. Distributions under these awards are payable at the end of the performance period in common stock or cash, at the Company’s discretion. The total potential payouts for awards granted during the three months ended March 31, 2014 range from 154,500 to 319,000 shares, should certain performance targets be achieved. The fair value of these awards was determined based on the Company’s stock price on the grant date reduced by the present value of expected dividends through the vesting period. These awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting upon specified events, including termination without cause, death, permanent disability or retirement of the grantee or a change in control of the Company.

Compensation expense for the performance share unit awards granted in 2014, 2013, and 2012 is being recognized based on the maximum estimated payout of 319,000, 485,000, and 233,000 shares, for each respective period.  Compensation expense for awards granted during 2011 was recognized based on the achieved target of 52%, or 121,431 shares, which were distributed during the three months ended March 31, 2014. Compensation expense related to performance share unit awards for the three months ended March 31, 2014 and 2013 was $0.6 million and $0.4 million, respectively. As of March 31, 2014, there was $8.2 million of unrecognized compensation expense related to performance share unit awards, which is expected to be recognized over a weighted average period of 2.4 years.