STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 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:



	Nine Months Ended September 30, 2018					Nine Months Ended September 30, 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	$	3.7	$	.9		$	4.2	$	.9
Discounts on various stock awards:
Deferred Stock Compensation Program	1.4		—			1.6		—
Stock-based retirement plans	.9		—			1.0		—
Discount Stock Plan	.8		—			.9		—
Performance Stock Unit (PSU) awards: ²
2018 PSU - TSR based ^2A	.9		.8			—		—
2018 PSU - EBIT CAGR based ^2B	2.3		2.5			—		—
2017 and prior PSU awards ^2C	2.8		(.9		)	4.0		(.7		)
Restricted Stock Unit awards	1.6		—			1.9		—
Profitable Growth Incentive (PGI) awards ³	1.4		1.4			1.1		1.1
Other, primarily non-employee directors restricted stock	.6		—			.7		—
Total stock-based compensation expense	16.4		$	4.7		15.4		$	1.3
Employee contributions for above stock plans	10.2					12.7
Total stock-based compensation	$	26.6				$	28.1

Tax benefits on stock-based compensation expense	$	3.9				$	5.5
Tax benefits on stock-based compensation payments	3.4					11.4
Total tax benefits associated with stock-based compensation	$	7.3				$	16.9



	Three Months Ended						Three Months Ended
	September 30, 2018						September 30, 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	$	(.4	)	$	.4		$	.6	$	.2
Discounts on various stock awards:
Deferred Stock Compensation Program	.5			—			.4		—
Stock-based retirement plans	.4			—			.3		—
Discount Stock Plan	.2			—			.3		—
Performance Stock Unit (PSU) awards: ²
2018 PSU - TSR based ^2A	.3			.2			—		—
2018 PSU - EBIT CAGR based ^2B	.8			.9			—		—
2017 and prior PSU awards ^2C	.9			(.9		)	1.3		(2.8		)
Restricted Stock Unit awards	.6			—			.7		—
Profitable Growth Incentive (PGI) awards ³	.2			.2			.3		.2
Other, primarily non-employee directors restricted stock	.2			—			.2		—
Total stock-based compensation expense	3.7			$	.8		4.1		$	(2.4	)
Employee contributions for above stock plans	3.7						3.8
Total stock-based compensation	$	7.4					$	7.9

Tax benefits on stock-based compensation expense	$	.9					$	1.4
Tax benefits on stock-based compensation payments	2.5						1.3
Total tax benefits associated with stock-based compensation	$	3.4					$	2.7

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

¹Stock-Based Retirement Plans

We have two stock-based retirement plans: the tax-qualified Stock Bonus Plan (SBP) for non-highly compensated employees and the non-qualified Executive Stock Unit Program (ESUP) for highly compensated employees. We make matching contributions to both plans. In addition to the automatic 50% match, we will make another matching contribution of up to 50% of the employee’s contributions for the year if certain profitability levels, as defined in the SBP and the ESUP, are obtained.

We plan to merge the SBP with our 401(k) plan on December 31, 2018. After the merger, our common stock will be added to the 401(k) plan as an investment option and participants may elect up to 20% of their contributions into our common stock beginning on January 1, 2019. Currently participants may contribute up to 100% of their contributions into our common stock.

²PSU 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 and 35% in cash; although, we reserve the right to pay up to 100% 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.

^2A2018 PSU - TSR based

Most of the 2018 PSU awards are based 50% upon our TSR compared to a peer group. A small number of PSU awards are based 100% upon relative TSR for certain business unit employees to complement their particular mix of incentive compensation. 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.

^2B2018 PSU - EBIT CAGR based

50% of each 2018 PSU award is based upon our or the applicable segment's 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 EBIT CAGR performance targets for our or the applicable segment's EBIT during the third year of the performance period compared to the EBIT during the fiscal year immediately preceding the 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.

^2C2017 and Prior PSU Awards

The 2017 and prior PSU awards are based solely on relative TSR. Vesting conditions are the same as (2A) 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.



	Nine Months Ended September 30,
	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.



	Nine Months Ended September 30,
	2018
Total shares base award	.1
Grant date per share fair value	$	40.92
Vesting period in years	2.5

³PGI Awards

In 2017 and prior years certain key management employees participated in a 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 our or the 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.



	Nine Months Ended September 30,
	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 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.



	Nine Months Ended September 30,
	2018
Total shares base award	.1
Grant date per share fair value	$	40.92
Vesting period in years	2.5

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