Long-term incentive compensation

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Long-term incentive compensation

12. Long-term incentive compensation

Long-term incentive program (LTIP) compensation includes both stock-based awards (principally stock-settled stock appreciation rights, restricted stock units, performance stock units, and cash-settled stock appreciation rights and restricted stock units) as well as long-term performance-based cash awards. Long-term incentive compensation expense, which was primarily general and administrative in nature, was attributed to the Company’s U.S. dialysis and related lab services business, DMG business, corporate administrative support, and the ancillary services and strategic initiatives.

The Company’s stock-based compensation awards are measured at their estimated fair values on the date of grant if settled in shares or at their estimated fair values at the end of each reporting period if settled in cash. The value of stock-based awards so measured is recognized as compensation expense on a cumulative straight-line basis over the vesting terms of the awards, adjusted for expected forfeitures.

During the nine months ended September 30, 2016, the Company granted 1,263 stock-settled stock appreciation rights with an aggregate grant-date fair value of $17,373 and a weighted average expected life of approximately 4.2 years, and also granted 227 stock-settled restricted stock units with an aggregate grant-date fair value of $17,008 and a weighted-average expected life of approximately 3.4 years. The Company also granted eight cash-settled stock appreciation rights and two cash-settled restricted stock units during the nine months ended September 30, 2016.

For the nine months ended September 30, 2016 and 2015, the Company recognized $61,042 and $100,171, respectively, in total LTIP expense, of which $29,817 and $42,794, respectively, represented stock-based compensation expense for stock appreciation rights, stock units, and discounted employee stock plan purchases, which are primarily included in general and administrative expense. The estimated tax benefits recorded for stock-based compensation for the nine months ended September 30, 2016 and 2015 was $9,769 and $14,870, respectively. As of September 30, 2016, the Company had $108,551 of total estimated unrecognized compensation costs for outstanding LTIP awards, including $62,323 related to stock-based compensation arrangements under the Company’s equity compensation and stock purchase plans. The Company expects to recognize the performance-based cash component of these LTIP costs over a weighted average remaining period of 1.0 year and the stock-based component of these LTIP costs over a weighted average remaining period of 1.4 years.

For the nine months ended September 30, 2016 and 2015, the Company received $27,012 and $31,069, respectively, in actual tax benefits upon the exercise of stock awards.