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STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [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, 2019
 
Six Months Ended 
 June 30, 2018
 
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
$
1.5

 
$
.3

 
$
4.1

 
$
.5

Discounts on various stock awards:

 
 
 

 
 
Deferred Stock Compensation Program
1.1

 
—

 
.9

 
—

Stock-based retirement plans
.5

 
—

 
.5

 
—

Discount Stock Plan
.6

 
—

 
.6

 
—

Performance Stock Unit (PSU) awards: 2
 
 
 
 
 
 
 
     2018 PSU - TSR based 2A
1.5

 
.7

 
.6

 
.6

     2018 PSU - EBIT CAGR based 2B
2.7

 
2.8

 
1.5

 
1.6

     2017 and prior PSU awards 2C
.9

 
(.2
)
 
1.9

 
—

Restricted Stock Unit awards
1.0

 
—

 
1.0

 
—

Profitable Growth Incentive (PGI) awards 3
—

 
—

 
1.2

 
1.2

Other, primarily non-employee directors restricted stock
.5

 
—

 
.4

 
—

Total stock-based compensation expense
10.3

 
$
3.6

 
12.7

 
$
3.9

Employee contributions for above stock plans
6.2

 
 
 
6.5

 
 
Total stock-based compensation
$
16.5

 
 
 
$
19.2

 
 
 
 
 
 
 
 
 
 
Tax benefits on stock-based compensation expense
$
2.4

 
 
 
$
3.0

 
 
Tax benefits on stock-based compensation payments
2.3

 
 
 
.9

 
 
Total tax benefits associated with stock-based compensation
$
4.7

 
 
 
$
3.9

 
 
 
Three Months Ended
 
Three Months Ended 
 
June 30, 2019
 
June 30, 2018
 
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

 
$
2.2

 
$
.3

Discounts on various stock awards:
 
 
 
 
 
 
 
Deferred Stock Compensation Program
.5

 
—

 
.4

 
—

Stock-based retirement plans
.3

 
—

 
.3

 
—

Discount Stock Plan
.3

 
—

 
.3

 
—

Performance Stock Unit (PSU) awards: 2
 
 
 
 
 
 
 
     2018 PSU - TSR based 2A
.8

 
(.1
)
 
.3

 
.3

     2018 PSU - EBIT CAGR based 2B
1.1

 
.8

 
.9

 
.9

     2017 and prior PSU awards 2C
.4

 
(.6
)
 
1.0

 
.1

Restricted Stock Unit awards
.5

 
—

 
.5

 
—

Profitable Growth Incentive (PGI) awards 3
—

 
—

 
.7

 
.7

Other, primarily non-employee directors restricted stock
.3

 
—

 
.1

 
—

Total stock-based compensation expense
5.1

 
$
.3

 
6.7

 
$
2.3

Employee contributions for above stock plans
3.6

 
 
 
3.8

 
 
Total stock-based compensation
$
8.7

 
 
 
$
10.5

 
 
 
 
 
 
 
 
 
 
Tax benefits on stock-based compensation expense
$
1.2

 
 
 
$
1.6

 
 
Tax benefits on stock-based compensation payments
.4

 
 
 
.3

 
 
Total tax benefits associated with stock-based compensation
$
1.6

 
 
 
$
1.9

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

1 Stock-Based Retirement Plans

Previous to 2019, we had 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 made matching contributions to both plans for the year if certain profitability levels were obtained.

For 2019, the provisions of the ESUP plan are unchanged. On December 31, 2018, we merged the SBP with our 401(k) plan. Our common stock is now an investment option in the 401(k) plan and participants may elect up to 20% of their contributions into our common stock. Previously participants could contribute up to 100% of their contributions into our common stock.

2 PSU Awards
During 2018, we merged our PSU and PGI award programs. PSU awards are now based on two equal measures: (i) Relative Total Shareholder Return (TSR = (Change in Stock Price + Dividends)/Beginning Stock Price) and (ii) EBIT Compound Annual Growth Rate (CAGR). These components are discussed below.

For outstanding 2018 and later 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 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 100% of the 2015 award (paid in the first quarter 2018) in cash.

 2A 2018 (and later) PSU - TSR based
Most of the 2018 and later 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 and later PSU awards contains the following conditions:
•
A service requirement—Awards generally “cliff” vest at the end of the three-year performance period; and
•
A market condition—Awards are based on our TSR 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.

2B 2018 (and later) PSU - EBIT CAGR based
Most of the 2018 and later PSU awards are based 50% 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 performance period. Expense is adjusted every quarter over the three-year performance period based on the number of shares expected to vest.
The EBIT CAGR portion of these awards contains the following conditions:
•
A service requirement—Awards generally “cliff” vest at the end of the three-year performance period; 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.

2C 2017 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 for the periods presented:
 
Six Months Ended June 30,
 
2019
 
2018
TSR based
 
 
 
Total shares base award
.1

 
.1

Grant date per share fair value
$
57.86

 
$
42.60

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

 
3.0

Expected volatility (over expected life)
21.5
%
 
19.9
%
Expected dividend yield (over expected life)
3.4
%
 
3.3
%
 
 
 
 
EBIT CAGR based
 
 
 
Total shares base award
.1

 
.1

Grant date per share fair value
$
39.98

 
$
40.92

Vesting period in years
3.0

 
2.5

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
2015
 
December 31, 2017
 
57
 
61.0%
 
—
 
$
6.9

 
First quarter 2018
2016
 
December 31, 2018
 
78
 
—%
 
—
 
$
—

 
First quarter 2019



3 PGI Awards

In 2017 and prior years, certain key management employees participated in a PGI program. The PGI awards were eliminated during 2018, and were replaced with the PSU EBIT CAGR award discussed above. These awards vested (0% to 250%) at the end of a two-year performance period 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. We paid the 2017 award half in shares of our common stock and half in cash. We elected to pay the 2016 award (paid in the first quarter of 2018) in cash. Both components were adjusted to fair value at each reporting period. As of first quarter 2019, all PGI awards have been paid out.
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
2016
 
December 31, 2017
 
44.0%
 
—
 
$
2.0

 
First quarter 2018
2017
 
December 31, 2018
 
155.0%
 
< .1 million
 
$
2.2

 
First quarter 2019