STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The following table recaps the components of stock-based and stock-related compensation for each period presented:

	Six Months Ended June 30,				Six Months Ended June 30,
	2013				2012
	To be settled with stock		To be settled in cash		To be settled with stock		To be settled in cash
Options (1):
Amortization of the grant date fair value	$	1.0	$	—	$	3.2	$	—
Cash payments in lieu of options	—		.8		—		.3
Stock-based retirement plans contributions	3.9		.7		3.3		.6
Discounts on various stock awards:
Deferred Stock Compensation Program	1.0		—		.6		—
Stock-based retirement plans	.7		—		.7		—
Discount Stock Plan	.5		—		.5		—
Performance Stock Unit awards (2)	3.2		3.4		3.3		—
Profitable Growth Incentive awards (1)	.5		.5		—		—
Restricted Stock Unit awards	2.6		—		1.4		—
Other, primarily non-employee directors restricted stock	.7		—		.4		—
Total stock-related compensation expense	14.1		$	5.4	13.4		$	.9
Employee contributions for above stock plans	6.1				4.9
Total stock-based compensation	$	20.2			$	18.3
Recognized tax benefits on stock-based compensation expense	$	5.4			$	5.1

	Three Months Ended June 30,					Three Months Ended June 30,
	2013					2012
	To be settled with stock		To be settled in cash			To be settled with stock		To be settled in cash
Options (1):
Amortization of the grant date fair value	$	.5	$	—		$	.9	$	—
Cash payments in lieu of options	—		—			—		—
Stock-based retirement plans contributions	1.6		.2			1.4		.2
Discounts on various stock awards:
Deferred Stock Compensation Program	.3		—			.1		—
Stock-based retirement plans	.2		—			.2		—
Discount Stock Plan	.2		—			.3		—
Performance Stock Unit awards (2)	1.6		(.9		)	1.6		.1
Profitable Growth Incentive awards (1)	.3		.3			—		—
Restricted Stock Unit awards	.9		—			.6		—
Other, primarily non-employee directors restricted stock	.2		—			.2		—
Total stock-related compensation expense	5.8		$	(.4	)	5.3		$	.3
Employee contributions for above stock plans	2.9					2.5
Total stock-based compensation	$	8.7				$	7.8
Recognized tax benefits on stock-based compensation expense	$	2.3				$	2.0

(1) Stock Option Grants and Profitable Growth Incentive Awards

Our most significant stock options have historically been granted annually on a discretionary basis to a broad group of employees.

Previous to 2013, we offered two different option choice programs. One group of employees was offered the choice to receive stock options or to receive a cash alternative equal to approximately one-half of the Black-Scholes value of the option grant foregone. Another group of employees, generally higher level employees, was offered a choice between stock options or restricted stock units (RSUs), on a ratio of four options foregone for each RSU offered. The RSUs vest in one-third increments at 12 months, 24 months and 36 months after the date of grant.

Starting in 2013, options are only offered in conjunction with the Deferred Compensation Program. In addition, certain key management employees participate in a new Profitable Growth Incentive (PGI) program. Options for other employees have been replaced with either cash awards or RSUs as offered in 2011 and 2012.

The PGI awards are issued as growth performance stock units (GPSUs). The GPSUs vest (0% to 250%) at the end of a two-year performance period. Vesting is based on the Company's or applicable profit center's Revenue Growth adjusted by a GDP factor when applicable and EBITDA Margin of the Company or applicable profit center at the end of a two-year performance period. The 2013 base PGI award was 130,920 shares. We intend to pay half in shares of our common stock and half in cash, although we reserve the right to pay up to 100% in cash. Both components are adjusted to fair value at each reporting period.

(2) Performance Stock Unit Awards

We also grant Performance Stock Unit (PSU) awards in the first quarter of each year to selected officers and other key managers. These awards contain the following conditions:

• A service requirement—Awards generally “cliff” vest three years following the grant date; and

• A market condition—Awards are based on our Total Shareholder Return [TSR = (Change in Stock Price + Dividends) / Beginning Stock Price] as compared to the TSR of a group of peer companies. The peer group consists of all the companies in the Industrial, Materials and Consumer Discretionary sectors of the S&P 500 and S&P Midcap 400 (approximately 320 companies). Participants will earn from 0% to 175% of the base award depending upon how our Total Shareholder Return ranks within the peer group at the end of the 3-year performance period.

Below is a summary of the number of shares and related grant date fair value of PSU’s for the periods presented. Grant date fair values are calculated using a Monte Carlo simulation of stock and volatility data for Leggett and each of the comparator companies and are based upon assumptions listed below. Grant date fair values are amortized using the straight-line method over the three-year vesting period.

	Six Months Ended June 30,
	2013			2012
Total shares base award	234,117			282,040
Grant date per share fair value	$	27.60		$	23.79
Risk-free interest rate	.4		%	.4		%
Expected life in years	3.0			3.0
Expected volatility (over expected life)	29.1		%	35.0		%
Expected dividend yield (over expected life)	4.2		%	4.8		%

The three-year performance cycle of the 2010 award was completed on December 31, 2012. Our TSR performance, relative to the peer group, ranked at 46th percentile (with 1% being best); accordingly, participants earned 91.0% of the base award and .3 million shares were distributed in January 2013.

The above information represents the 65% portion of the award that we intend to pay in shares of our common stock, although we reserve the right to pay up to 100% in cash. There is also an additional amount that represents 35% of the award that we will settle in cash. It is recorded as a liability and is adjusted to fair value at each reporting period.