Stockholders' Equity and Share-Based Awards

12 Months Ended

Dec. 31, 2014

Stockholders' Equity and Share-Based Awards

13. Stockholders’ Equity and Share-Based Awards

The Company maintains the 2013 Stock Incentive Plan, which allows for grants of stock options, restricted stock and short-term cash awards. At December 31, 2014, there were approximately 4.2 million share-based awards collectively available for grant under this stock plan.

Stock Options

A summary of the Company’s stock option activity in 2014 is as follows:

	Shares (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Life (years)		Total Intrinsic Value (in millions)
Options outstanding, beginning of year		533.6		$	9.65
Granted		—			—
Exercised		(232.6	)		9.83
Cancelled		—			—
Options outstanding, end of year (a)		301.0		$	9.50		1.4	$	11.6

(a) All options outstanding are exercisable

The Company does not use cash to settle any of its options or restricted stock awards and when available issues shares from its treasury stock instead of issuing new shares. Common stock options vest ratably over an explicit service period of typically 3 to 4 years and generally have a contractual term of 7 years. The total intrinsic value of options exercised was $7.2, $6.8 and $16.5 for 2014, 2013 and 2012, respectively. There were no options granted in 2014, 2013 and 2012.

Restricted Shares of Common Stock

The Company issues restricted stock awards whose restrictions lapse upon either the passage of time (service vesting), achieving performance targets, attaining Company common stock price thresholds or some combination of these restrictions. The contractual life is generally 7 years for those restricted stocks with performance targets, common stock price thresholds or some combination thereof. For those restricted stock awards with common stock price thresholds, the fair values were determined using a Monte Carlo simulation embedded in a lattice model. The fair value for all other restricted stock awards were based on the closing price of the Company’s common stock on the dates of grant.

A summary of the Company’s restricted stock activity for 2014 is as follows:

	Shares (in thousands)
Outstanding as of December 31, 2013		6,009.9
Granted		5,501.4
Released/Vested		(4,129.9	)
Cancelled		(167.3	)
Outstanding as of December 31, 2014		7,214.1

The total fair value of restricted shares granted and total fair value of restricted shares vested for 2014, 2013 and 2012 is as follows:

(in millions)	2014		2013		2012
Total fair value of restricted shares granted	$	222.0	$	75.0	$	43.2
Total fair value of restricted shares vested		77.1		85.7		49.6

For those restricted stock awards with common stock price thresholds, the weighted average grant date fair values of these awards were $36.61, $22.53 and $12.65 for 2014, 2013 and 2012, respectively, based on the following assumptions:

	2014			2013			2012
Expected volatility		32.0	%		40.7	%		45.8	%
Risk-free interest rates		1.7	%		0.8	%		0.9	%
Derived service periods (in years)		0.3			0.1			0.2

For all other restricted stock awards, the weighted average grant date fair values were $40.99, $36.92 and $21.74 for the years ended December 31, 2014, 2013 and 2012, respectively.

As part of the restricted stock awards granted in 2014, in January 2014, the Board authorized an annual grant of approximately 0.8 million restricted stock awards to certain executive officers. These awards had an aggregate grant date fair value of $28.8 and vested during 2014 when the Company’s weighted average share price exceeded certain thresholds. In 2014, the Company also granted approximately 3.9 million restricted stock awards to certain executive officers with an aggregate grant date fair value of $161 that vest upon the achievement of performance targets, the achievement of which are currently deemed improbable. In 2014, the Company also granted approximately 0.8 million restricted stock awards with an aggregate grant date fair value of $32.3 that vest upon the achievement of the achievement of certain performance targets.

As of December 31, 2014, there was $28.7 of unrecognized compensation cost related to non-vested share-based awards whose costs are expected to be recognized through 2017 over a weighted-average period of approximately 20 months.

During the fourth quarter of 2012, the Company recognized $33.6 of cumulative stock-based compensation related to certain restricted stock awards granted in 2010 where compensation expense was not previously recognized as the achievement of the performance targets was not deemed probable.

Stockholders’ Equity

In February 2014, the Board authorized an increase in the then available amount under the Company’s existing stock repurchase program (the “Stock Repurchase Program”) to allow for the repurchase of up to $500 in the aggregate of the Company’s common stock.

In March 2014, pursuant to the Stock Repurchase Program, the Company used proceeds from the 2034 Convertible Notes offering to repurchase approximately 4.0 million shares of its common stock for approximately $163 at a per share price of approximately $40.43 through privately negotiated transactions.

In September 2013, pursuant to a public offering of its common stock, the Company completed an equity offering of approximately 24.8 million newly-issued shares of common stock at a per share price of approximately $31.33 per share. The net proceeds to the Company, after the payment of underwriting discounts and other expenses of the offering, were approximately $745. The proceeds were used to fund a portion of the YCC Acquisition.

Cash dividends paid to stockholders in 2012 were $7.5. In January 2012, the Company announced that the Board had decided to suspend the Company’s dividend program following the dividend paid on January 31, 2012.