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STOCK-BASED COMPENSATION (Tables)
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Components of Stock-Based and Stock-Related Compensation
The following table recaps the components of stock-based and stock-related compensation for each period presented:
 
 
Three Months Ended 
 March 31, 2018
 
Three Months Ended 
 March 31, 2017
 
To be settled with stock
 
To be settled in cash
 
To be settled with stock
 
To be settled in cash
Stock-based retirement plans contributions
$
1.9

 
$
.2

 
$
1.4

 
$
.4

Discounts on various stock awards:

 
 
 

 
 
Deferred Stock Compensation Program
.5

 

 
.7

 

Stock-based retirement plans
.2

 

 
.3

 

Discount Stock Plan
.3

 

 
.3

 

Performance Stock Unit (PSU) awards: 1
 
 
 
 
 
 
 
     2018 PSU - TSR based 1A
.3

 
.3

 

 

     2018 PSU - EBIT CAGR based 1B
.6

 
.7

 

 

     2017 and prior PSU awards 1C
.9

 
(.1
)
 
1.3

 
.2

Restricted Stock Unit awards
.5

 

 
.6

 

Profitable Growth Incentive (PGI) awards 2
.5

 
.5

 
.4

 
.5

Other, primarily non-employee directors restricted stock
.3

 

 
.2

 

Total stock-based compensation expense
6.0

 
$
1.6

 
5.2

 
$
1.1

Employee contributions for above stock plans
2.7

 
 
 
5.1

 
 
Total stock-based compensation
$
8.7

 
 
 
$
10.3

 
 
 
 
 
 
 
 
 
 
Tax benefits on stock-based compensation expense
$
1.4

 
 
 
$
1.9

 
 
Tax benefits on stock-based compensation payments
.6

 
 
 
8.8

 
 
Total tax benefits associated with stock-based compensation
$
2.0

 
 
 
$
10.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Included below is the activity in our most significant stock-based plans:

1 PSU Awards
In November 2017, the Compensation Committee approved changes to merge the PSU and PGI award programs for the 2018 award. The 2018 PSU awards have a component based on relative Total Shareholder Return (TSR) and another component based on Earnings Before Interest and Taxes (EBIT) Compound Annual Growth Rate (CAGR). These components are discussed below.

For outstanding 2018 awards, we intend to pay 50% in shares of our common stock and 50% in cash; although, we reserve the right to pay up to 100% in cash.

For outstanding 2016 and 2017 awards, we intend to pay 65% in shares of our common stock; although, we reserve the right to pay up to 100% in cash. The amount that represents 35% of the award will be settled in cash.

Cash settlements are recorded as a liability and adjusted to fair value at each reporting period. We elected to pay the 2015 award (paid in the first quarter 2018) in cash.

 1A 2018 PSU - TSR based
50% of each 2018 PSU award is based upon the Company's TSR compared to a peer group. Grant date fair values are calculated using a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies. Grant date fair values are amortized using the straight-line method over the three-year vesting period.
The Relative TSR vesting condition of the 2018 PSU award contains 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 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 200% of the base award depending upon how our TSR ranks within the peer group at the end of the three-year performance period.

1B 2018 PSU - EBIT CAGR based
50% of each 2018 PSU award is based upon the Company's or applicable Segments' EBIT CAGR. Grant date fair values are calculated using the grant date stock price discounted for dividends over the vesting period. Expense is adjusted every quarter over the three-year vesting period based on the number of shares expected to vest.
The EBIT CAGR portion of this award contains the following conditions:
A service requirement—Awards generally “cliff” vest three years following the grant date; and
A performance condition—Awards are based on achieving specified performance targets that are defined by reference to the Company's or applicable segment's operations at the end of the three-year performance period. Participants will earn from 0% to 200% of the base award.
In connection with the decision to move a significant portion of the long-term incentive opportunity from a two-year to a three-year performance period by eliminating PGI awards, in January 2018, we also granted participants a one-time transition PSU award, based upon EBIT CAGR over a two-year performance period.

1C 2017 and Prior PSU Awards
The 2017 and prior PSU awards are based solely on relative TSR. Vesting conditions are the same as (1A) above other than a maximum payout of 175% of the base award.
Below is a summary of the number of shares and related grant date fair value of PSU’s based on TSR for the periods presented.
 
Three Months Ended March 31,
 
2018
 
2017
Total shares base award
.1

 
.1

Grant date per share fair value
$
42.60

 
$
50.75

Risk-free interest rate
2.4
%
 
1.5
%
Expected life in years
3.0

 
3.0

Expected volatility (over expected life)
19.9
%
 
19.5
%
Expected dividend yield (over expected life)
3.3
%
 
2.8
%

Three-Year Performance Cycle
Award Year
 
Completion Date
 
TSR Performance
Relative to the  Peer Group (1%=Best)
 
Payout as a
Percent of the
Base Award
 
Number of Shares
Distributed
 
Cash Portion
 
Distribution Date
2014
 
December 31, 2016
 
10
 
175.0%
 
.4 million
 
$
9.8

 
First quarter 2017
2015
 
December 31, 2017
 
57
 
61.0%
 
 
$
6.9

 
First quarter 2018


Below is a summary of the number of shares and related grant date fair value of PSU’s based on EBIT CAGR for the periods presented.

 
Three Months Ended March 31,
 
2018
Total shares base award
.1

Grant date per share fair value
$
40.92

Vesting period in years
2.5



2 Profitable Growth Incentive Awards

In 2017 and prior years certain key management employees participated in a Profitable Growth Incentive (PGI) program. The PGI awards were 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 at the end of a two-year performance period. The 2017 base target PGI awards were less than .1 shares. If earned, 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. We elected to pay the 2016 award (paid in the first quarter of 2018) in cash. Both components are adjusted to fair value at each reporting period.

Two-Year Performance Cycle
Award Year
 
Completion Date
 
Average Payout as a
Percent of the
Base Award
 
Number of  Shares
Distributed
 
Cash Portion
 
Distribution Date
2015
 
December 31, 2016
 
36.0%
 
<.1 million
 
$
.8

 
First quarter 2017
2016
 
December 31, 2017
 
44.0%
 
 
$
2.0

 
First quarter 2018
Summary of Shares and Related Grant Date Fair Value
Below is a summary of the number of shares and related grant date fair value of PSU’s based on TSR for the periods presented.
 
Three Months Ended March 31,
 
2018
 
2017
Total shares base award
.1

 
.1

Grant date per share fair value
$
42.60

 
$
50.75

Risk-free interest rate
2.4
%
 
1.5
%
Expected life in years
3.0

 
3.0

Expected volatility (over expected life)
19.9
%
 
19.5
%
Expected dividend yield (over expected life)
3.3
%
 
2.8
%
Summary of Performance Cycle
Two-Year Performance Cycle
Award Year
 
Completion Date
 
Average Payout as a
Percent of the
Base Award
 
Number of  Shares
Distributed
 
Cash Portion
 
Distribution Date
2015
 
December 31, 2016
 
36.0%
 
<.1 million
 
$
.8

 
First quarter 2017
2016
 
December 31, 2017
 
44.0%
 
 
$
2.0

 
First quarter 2018
Three-Year Performance Cycle
Award Year
 
Completion Date
 
TSR Performance
Relative to the  Peer Group (1%=Best)
 
Payout as a
Percent of the
Base Award
 
Number of Shares
Distributed
 
Cash Portion
 
Distribution Date
2014
 
December 31, 2016
 
10
 
175.0%
 
.4 million
 
$
9.8

 
First quarter 2017
2015
 
December 31, 2017
 
57
 
61.0%
 
 
$
6.9

 
First quarter 2018
Summary of Shares and Related Grant Date Fair Value
Below is a summary of the number of shares and related grant date fair value of PSU’s based on EBIT CAGR for the periods presented.

 
Three Months Ended March 31,
 
2018
Total shares base award
.1

Grant date per share fair value
$
40.92

Vesting period in years
2.5