Share-Based Compensation Plans
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Dec. 31, 2013
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Share-based compensation plans | Note 16 – Share-Based Compensation Plans
We have share-based compensation plans to retain employees and nonemployee directors and to more closely align their interests with those of our shareholders.
Non-Vested Shares and Stock Options The 2005 Equity Incentive Plan (the “2005 Plan”) and the 2013 Equity Incentive Plan (the “2013 Plan”) permit grants of restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights, stock options, as well as other share-based awards to eligible employees. The 2013 Plan also permits cash awards to eligible employees. The 2005 Plan was replaced by the 2013 Equity Incentive Plan effective in February 2013. No further grants of awards will be made under the 2005 Plan.
Directors are eligible for share-based awards through the Non-Employee Directors' Equity Plan (the “Directors' Plan”). To date, we have granted only deferred stock units under the Directors' Plan. There are also outstanding stock options granted to directors under a prior plan, the Non-Employee Directors' Stock Option Plan (the “Prior Directors' Plan”).
There are 3.5 million shares underlying share-based plans that are authorized, but not yet granted. Outstanding awards at December 31, 2013 include performance share units (“PSUs”), market share units (“MSUs”), restricted stock units (“RSUs”), deferred stock units (“DSUs”) and stock options.
General Terms PSUs granted in 2013 reward the achievement of pre-established financial goals over the performance period (April 1, 2013, through December 31, 2015) and will be paid out in shares of Brink's common stock. Threshold, target and maximum levels of the financial goal performance were established, which correspond to payouts between 0% and 200% of target. In addition, the number of shares issued are subject to a +/- 25% multiplier that will be applied to the payout based on Brink's total shareholder return (“TSR”) relative to companies in the S&P 500 index. TSR at or above the 75th percentile will result in the application of a +25% multiplier to PSU payouts while TSR at or below the 25th percentile will result in the application of a -25% multiplier to PSU payouts. There is no multiplier applied to PSU payouts if TSR performance is between the 25th and 75th percentile.
MSUs granted in 2013 will be paid out in shares of Brink's common stock at the end of the performance period (April 1, 2013, through December 31, 2015) at a rate of 0 to 150% of a target number of shares awarded. The multiplier is calculated as the ratio of the price of Brink's stock at the end of the performance period divided by the price of Brink's stock at the beginning of the performance period. If the price of Brink's common stock at the end of the performance period is less than 50% of the initial price, no payout for MSUs will occur.
RSUs granted will be paid out in shares of Brink's common stock when they vest, generally ratably in three equal annual installments. Stock options (none granted in 2013) were granted at a price not less than the average quoted market price on the date of grant. Options granted to employees have a maximum term of six years and options granted to directors have a maximum term of ten years.
Expense recognition Compensation expense related to share-based awards granted to employees is recognized from the grant date to the earlier of the retirement eligible date or the stated vesting date. Compensation expense related to deferred stock units granted to directors is recognized in its entirety at the grant date. Compensation expense is classified as selling, general and administrative expenses in the consolidated statements of income.
Method and Assumptions Used to Estimate Fair Value The fair value of RSUs and DSUs was measured at the date of grant based on the price of Brink's common stock, adjusted for a discount on units that do not receive or accrue dividends. The fair value of PSUs and MSUs was estimated using a Monte-Carlo simulation with the following estimated weighted-average assumptions:
The fair value of stock options was estimated at the time of grant using the Black-Scholes option-pricing model. For those awards subject to a ratable vesting schedule, fair value was measured for each separately vesting portion of the award as if the award were comprised of three separate individual awards. The fair value of options granted during 2012 and 2011 was calculated using the following estimated weighted-average assumptions:
As of December 31, 2013, total unrecognized compensation cost related to previously granted awards expected to be recognized are as follows:
The following tables below summarize the activity in all plans for PSUs, MSUs, RSUs and DSUs.
Option Activity The table below summarizes the activity in all plans for options of our common stock.
(a) The number of options expected to vest takes into account an estimate of expected forfeitures.
The intrinsic value of a stock option is the difference between the market price of the shares underlying the option and the exercise price of the option. The market price at December 31, 2013, was $34.14 per share. The total intrinsic value of options exercised was $2.0 million ($6.74 per share) in 2013, $0.6 million ($8.07 per share) in 2012, and $5.6 million ($9.99 per share) in 2011. The total grant-date fair value of options that vested during 2013 was $1.8 million, during 2012 was $1.8 million and during 2011 was $3.2 million.
There were 1.2 million shares of exercisable options with a weighted-average exercise price of $30.92 per share at December 31, 2013. There were 2.0 million shares of exercisable options with a weighted-average exercise price of $32.15 per share at December 31, 2012, and 2.4 million shares of exercisable options with a weighted-average exercise price of $32.03 per share at December 31, 2011.
Other Share-Based Compensation We have a deferred compensation plan that allows participants to defer a portion of their compensation into common stock units. Units may be redeemed by employees for an equal number of shares of Brink's common stock. Employee accounts held 222,227 units at December 31, 2013, and 421,846 units at December 31, 2012.
We have a stock accumulation plan for our non-employee directors denominated in Brink's common stock units. Directors' accounts held 72,541 units at December 31, 2013, and 64,670 units at December 31, 2012. |