Common Stock and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Common Stock and Share-Based Compensation | ' |
10. Common Stock and Share-Based Compensation |
On August 7, 2012, the Dean Foods Compensation Committee, the Dean Foods board of directors, and our board of directors approved the terms of our 2012 Stock Incentive Plan (the “2012 SIP”). In connection with our initial public offering, 20 million shares of our Class A common stock were reserved for issuance under the 2012 SIP upon the exercise of stock options, restricted stock units (“RSUs”), or restricted stock awards that will be issued to our employees and non-employee directors. The 2012 SIP also includes awards of stock appreciation rights (“SARs”) and phantom shares as part of our long-term incentive compensation program. In general, awards granted under the 2012 SIP vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date, and one-third on the third anniversary of the grant date. Unvested awards vest immediately upon a change of control and in the following additional circumstances: (i) an employee retires after reaching the age of 65, (ii) in certain cases upon death or qualified disability, and (iii) with the exception of the awards granted in connection with the initial public offering, an employee with 10 years of service retires after reaching the age of 55. |
Prior to the Distribution, certain of the Company’s employees participated in share-based compensation plans sponsored by Dean Foods. These plans provided employees with RSUs, options to purchase shares of Dean Foods’ common stock, and other stock-based awards. Given that the Company’s employees directly benefit from participation in these plans, the expense incurred by Dean Foods for stock and options granted specifically to our employees has been reflected in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012. These amounts were based on the awards and terms previously granted to our employees, but may not reflect the equity awards or results that we would have experienced or expect to experience as a stand-alone public company. No new grants of Dean Foods’ equity were made to our employees after completion of our initial public offering. Prior to completion of the initial public offering, expenses related to the corporate employees of Dean Foods were allocated based on the Company’s percentage of Dean Foods’ total sales and totaled $1.2 million and $3.7 million for the three and nine months ended September 30, 2012, respectively. |
For the Dean Foods plans, the share and unit data presented in the tables below only reflect the costs that were directly attributable to the Company’s employees and none of the allocated expenses of Dean Foods’ corporate employees. On May 23, 2013 and in connection with the Distribution, all Dean Foods equity-based awards held by 162 of our non-employee directors and employees were converted into equity-based awards with respect to our Class A common stock. These Dean Foods equity-based awards included Dean Foods stock options (whether vested or unvested), unvested RSUs and unvested Dean Foods restricted stock awards held by our non-employee directors on the date of the Distribution. The options to purchase Dean Foods common stock held by our directors and employees were converted to options to purchase our Class A common stock in a manner that preserved the life and aggregate intrinsic value in the converted stock option and continued the same proportionate relationship between the exercise price and the value of our Class A common stock as existed with respect to the Dean Foods common stock immediately prior to the Distribution. The adjustment was effected based on a formula using the volume weighted average price of Dean Foods common stock and our Class A common stock during the five trading day period ended on the second trading day preceding the Distribution. The unvested Dean Foods RSUs held by our directors and employees were converted to WhiteWave RSUs in a manner that, on a unit-by-unit basis, preserved the life and intrinsic value of each outstanding Dean Foods RSU (determined using the same volume weighted average values as described above). The unvested Dean Foods phantom shares held by our employees were converted to WhiteWave phantom shares in a manner that, on a unit-by-unit basis, preserved the life and intrinsic value of each outstanding Dean Foods phantom share (determined using the same volume weighted average values as described above). Dean Foods restricted stock awards held by our directors on the date of the Distribution were converted into restricted stock awards with respect to our Class A common stock by (i) applying the same volume weighted average values as described above and (ii) subtracting any shares of our Class A common stock and Class B common stock received by our directors in the Distribution in respect of such Dean Foods restricted stock awards. We did not recognize any incremental expense in connection with the conversion of Dean Foods’ equity-based awards into WhiteWave awards. |
WhiteWave Stock Options |
The following table summarizes stock option activity during the nine months ended September 30, 2013: |
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| | | | | | | | | | | | | | | | |
| | Number of | | | Weighted | | | Weighted | | | Aggregate | |
options | average | average | intrinsic value |
| exercise price | contractual life | |
Options outstanding at January 1, 2013 | | | 2,445,327 | | | $ | 16.98 | | | | | | | | | |
Granted | | | 1,254,273 | | | | 15.19 | | | | | | | | | |
Forfeited and cancelled (1) | | | (53,897 | ) | | | 18.96 | | | | | | | | | |
Exercised | | | (717,477 | ) | | | 16.53 | | | | | | | | | |
Converted from Dean Foods at Distribution (2) | | | 8,308,857 | | | | 17.45 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Options outstanding at September 30, 2013 | | | 11,237,083 | | | | 17.15 | | | | 6.45 | | | $ | 45,040,362 | |
| | | | | | | | | | | | | | | | |
Options vested and expected to vest at September 30, 2013 | | | 11,092,173 | | | | 17.17 | | | | 6.42 | | | | 44,405,808 | |
Options exercisable at September 30, 2013 | | | 6,274,312 | | | $ | 18.94 | | | | 4.51 | | | $ | 19,797,076 | |
|
-1 | Pursuant to the terms of the 2012 SIP, options that are cancelled or forfeited may be available for future grants. | | | | | | | | | | | | | | | |
-2 | On May 23, 2013 and in connection with the Distribution, all Dean Foods equity-based awards held by our non-employee directors and employees were converted into equity-based awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
|
Share-based compensation expense for stock options is recognized ratably over the vesting period. The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model, using the following assumptions: |
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| | | | | | | | | | | | | | | | |
| | Nine months ended | | | | | | | | | | | | | | |
September 30, 2013 | | | | | | | | | | | | | | |
Expected volatility | | 28% | | | | | | | | | | | | | | |
Expected dividend yield | | 0% | | | | | | | | | | | | | | |
Expected option term | | 6 years | | | | | | | | | | | | | | |
Risk-free rate of return | | 1.13% to 1.66% | | | | | | | | | | | | | | |
Forfeiture rate | | 3% | | | | | | | | | | | | | | |
Dean Foods Stock Options |
The following table summarizes stock option activity during the nine months ended September 30, 2013: |
|
| | | | | | | | | | | | | | | | |
| | Number of | | | Weighted | | | | | | | | | |
options | average | | | | | | | | |
| exercise price | | | | | | | | |
Options outstanding at January 1, 2013 | | | 6,845,250 | | | $ | 18.45 | | | | | | | | | |
Granted | | | — | | | | — | | | | | | | | | |
Forfeited and cancelled | | | (227,424 | ) | | | 18.09 | | | | | | | | | |
Exercised | | | (111,031 | ) | | | 13.04 | | | | | | | | | |
Transferred (1) | | | 1,135,399 | | | | 21.38 | | | | | | | | | |
Converted to WhiteWave stock options at Distribution (2) | | | (7,642,194 | ) | | | 18.98 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Options outstanding at September 30, 2013 | | | — | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
-1 | Transferred options are attributable to employees that transferred to or from other Dean Foods’ divisions. | | | | | | | | | | | | | | | |
-2 | On May 23, 2013 and in connection with the Distribution, all Dean Foods equity-based awards held by our non-employee directors and employees were converted into equity-based awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
Share-based compensation expense for stock options is recognized ratably over the vesting period. The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model, using the following assumptions: |
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| | | | | | | | | | | | | | | | |
| | Nine months ended | | | | | | | | | | |
September 30, | | | | | | | | | | |
| | 2013 (1) | | | 2012 | | | | | | | | | | |
Expected volatility | | | — | | | 44% | | | | | | | | | | |
Expected dividend yield | | | — | | | 0% | | | | | | | | | | |
Expected option term | | | — | | | 5 years | | | | | | | | | | |
Risk-free rate of return | | | — | | | 0.62% to 0.89% | | | | | | | | | | |
Forfeiture rate | | | — | | | 3% | | | | | | | | | | |
|
-1 | Dean Foods did not grant any Dean Foods stock options to WhiteWave non-employee directors, executive officers, and employees during 2013. | | | | | | | | | | | | | | | |
|
WhiteWave Restricted Stock Units |
The following table summarizes RSU activity during the nine months ended September 30, 2013: |
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| | | | | | | | | | | | | | | | |
RSUs outstanding January 1, 2013 | | | 674,681 | | | | | | | | | | | | | |
RSUs issued | | | 354,305 | | | | | | | | | | | | | |
Shares issued upon vesting of RSUs | | | (9,175 | ) | | | | | | | | | | | | |
RSUs cancelled or forfeited (1) | | | (4,333 | ) | | | | | | | | | | | | |
RSUs converted from Dean Foods at Distribution (2) | | | 464,768 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
RSUs outstanding at September 30, 2013 | | | 1,480,246 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Weighted average grant date fair value per share | | $ | 17.11 | | | | | | | | | | | | | |
|
-1 | Pursuant to the terms of the 2012 SIP, employees have the option of forfeiting RSUs to cover their minimum statutory tax withholding when shares are issued. RSUs that are cancelled or forfeited may be available for future grants. | | | | | | | | | | | | | | | |
-2 | On May 23, 2013 and in connection with the Distribution, all Dean Foods equity-based awards held by our non-employee directors and employees were converted into equity-based awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
Dean Foods Restricted Stock Units |
The following table summarizes RSU activity during the nine months ended September 30, 2013: |
|
| | | | | | | | | | | | | | | | |
RSUs outstanding January 1, 2013 | | | 786,710 | | | | | | | | | | | | | |
RSUs issued | | | 20,235 | | | | | | | | | | | | | |
RSUs cancelled or forfeited | | | (60,747 | ) | | | | | | | | | | | | |
Shares issued upon vesting of RSUs | | | (352,352 | ) | | | | | | | | | | | | |
RSUs transferred (1) | | | 33,636 | | | | | | | | | | | | | |
RSUs converted to WhiteWave RSUs at Distribution (2) | | | (427,482 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
RSUs outstanding at September 30, 2013 | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
-1 | Transferred RSUs are attributable to employees that transferred to or from other Dean Foods’ divisions. | | | | | | | | | | | | | | | |
-2 | On May 23, 2013 and in connection with the Distribution, all Dean Foods equity-based awards held by our non-employee directors and employees were converted into equity-based awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
Dean Foods Cash Performance Units |
In 2010, Dean Foods began granting cash performance units (“CPUs”) to employees as part of its long-term incentive compensation program under the terms of the 2007 Stock Incentive Plan (the “2007 Plan”). The CPU awards are cash-settled awards and are designed to link compensation of certain executive officers and other key employees to Dean Foods’ performance over a three-year period. The performance metric, as defined in the awards, is the performance of the Dean Foods stock price relative to that of a peer group of companies. The range of payout under the awards is between 0% and 200% and is payable in cash at the end of each respective performance period. The fair value of the awards is measured at each reporting period. Compensation expense related to the Company’s direct employees is recognized over the vesting period which is recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. Prior to the completion of our initial public offering, a liability related to these units was not reflected in the unaudited condensed consolidated balance sheets as the payout was funded by Dean Foods and subsequent to completion of our initial public offering, a corresponding liability has been recorded in other long-term liabilities in our unaudited condensed consolidated balance sheets. |
In connection with our initial public offering, Dean Foods valued the 2011 and 2012 CPU awards for our executives based on performance as of December 31, 2012, instead of at the end of the originally scheduled 36-month performance periods. The cash value of these awards was paid out on a prorated basis during the nine months ended September 30, 2013. |
The following table summarizes CPU activity with respect to the 2011 and 2012 CPU awards during the nine months ended September 30, 2013: |
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| | | | | | | | | | | | | | | | |
| | Units | | | | | | | | | | | | | |
Outstanding at January 1, 2013 | | | 6,105,000 | | | | | | | | | | | | | |
Granted | | | — | | | | | | | | | | | | | |
Converted/paid | | | (6,105,000 | ) | | | | | | | | | | | | |
Forfeited | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Outstanding at September 30, 2013 | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
WhiteWave Phantom Shares |
We grant phantom shares under the 2012 SIP as part of our long-term incentive compensation program, which are similar to RSUs in that they are based on the price of WhiteWave Class A common stock and vest ratably over a three-year period, but are cash-settled based upon the value of WhiteWave Class A common stock at each vesting period. The fair value of the awards is re-measured at each reporting period. Compensation expense is recognized over the vesting period, which is recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. A corresponding liability has been recorded in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets. The following table summarizes the phantom share activity during the nine months ended September 30, 2013: |
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| | | | | | | | | | | | | | | | |
| | Shares | | | Weighted-average | | | | | | | | | |
grant date fair value | | | | | | | | |
per share | | | | | | | | |
Outstanding at January 1, 2013 | | | 225,771 | | | $ | 17 | | | | | | | | | |
Granted | | | 214,391 | | | | 15.24 | | | | | | | | | |
Converted/paid | | | (6,787 | ) | | | 18.79 | | | | | | | | | |
Forfeited | | | (18,915 | ) | | | 17.09 | | | | | | | | | |
Converted from Dean Foods at Distribution (1) | | | 256,806 | | | | 18.79 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Outstanding at September 30, 2013 | | | 671,266 | | | $ | 17.1 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
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(1) | On May 23, 2013 and in connection with the Distribution, all Dean Foods phantom awards held by our employees were converted into phantom awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
Dean Foods Phantom Shares |
In 2011, Dean Foods began granting phantom shares as part of its long-term incentive compensation program, which are similar to RSUs in that they are based on the price of Dean Foods’ stock and vest ratably over a three-year period, but are cash-settled based upon the value of Dean Foods’ stock at each vesting period. The fair value of the awards is re-measured at each reporting period. Compensation expense is recognized over the vesting period, which is recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. Prior to completion of our initial public offering, a liability related to these units has not been reflected in the unaudited condensed consolidated balance sheets as the payout was funded by Dean Foods and subsequent to completion of our initial public offering, a corresponding liability has been recorded in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets. The following table summarizes the phantom share activity during the nine months ended September 30, 2013: |
|
| | | | | | | | | | | | | | | | |
| | | | | Weighted-average | | | | | | | | | |
| | | | | grant date fair value | | | | | | | | | |
| | Shares | | | per share | | | | | | | | | |
Outstanding at January 1, 2013 | | | 397,618 | | | $ | 11.43 | | | | | | | | | |
Granted | | | — | | | | — | | | | | | | | | |
Converted/paid | | | (156,247 | ) | | | 11.09 | | | | | | | | | |
Forfeited | | | (7,442 | ) | | | 11.45 | | | | | | | | | |
Transferred (1) | | | 2,360 | | | | 11.9 | | | | | | | | | |
Converted to WhiteWave phantom shares at Distribution (2) | | | (236,289 | ) | | | 11.31 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Outstanding at September 30, 2013 | | | — | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
-1 | Transferred phantom shares are attributable to employees that transferred to or from other Dean Foods’ divisions. | | | | | | | | | | | | | | | |
-2 | On May 23, 2013 and in connection with the Distribution, all Dean Foods phantom awards held by our employees were converted into phantom awards with respect to our Class A common stock. | | | | | | | | | | | | | | | |
|
WhiteWave SARs |
We grant SARs under the 2012 SIP as part of our long-term incentive compensation program, which are similar to stock options in that they are based on the price of WhiteWave Class A common stock and vest ratably over a three-year period, but are cash-settled based upon the value of WhiteWave stock at the exercise date. The fair value of the awards is re-measured at each reporting period. Compensation expense is recognized over the vesting period, which is recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. A corresponding liability has been recorded in accounts payable and accrued expenses in our unaudited condensed consolidated balance sheets. The following table summarizes SAR activity during the nine months ended September 30, 2013: |
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| | | | | | | | | | | | | | | | |
| | Number of | | | Weighted | | | Weighted | | | Aggregate | |
SARs | average | average | intrinsic value |
| exercise price | contractual life | |
SARs outstanding at January 1, 2013 | | | 211,111 | | | $ | 17 | | | | | | | | | |
Granted | | | 82,582 | | | | 15.16 | | | | | | | | | |
Forfeited and cancelled (1) | | | — | | | | — | | | | | | | | | |
Exercised | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | |
SARs outstanding at September 30, 2013 | | | 293,693 | | | | 16.48 | | | | 9.16 | | | $ | 1,024,219 | |
| | | | | | | | | | | | | | | | |
SARs exercisable at September 30, 2013 | | | — | | | $ | — | | | | — | | | $ | — | |
|
-1 | Pursuant to the terms of the 2012 SIP, SARs that are cancelled or forfeited may be available for future grants. | | | | | | | | | | | | | | | |
The fair value of each SAR is estimated on the date of grant using the Black-Scholes valuation model with the following assumptions: |
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| | | | | | | | | | | | | | | | |
| | Nine months ended | | | | | | | | | | | | | | |
September 30, 2013 | | | | | | | | | | | | | | |
Expected volatility | | 28% | | | | | | | | | | | | | | |
Expected dividend yield | | 0% | | | | | | | | | | | | | | |
Expected option term | | 6 years | | | | | | | | | | | | | | |
Risk-free rate of return | | 1.13% to 1.66% | | | | | | | | | | | | | | |
Forfeiture rate | | 3% | | | | | | | | | | | | | | |
|
Share-Based Compensation Expense |
The following table summarizes the share-based compensation expense recognized for the Company’s direct participants in the Dean Foods long-term incentive compensation plan in periods prior to completion of our initial public offering: |
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| | | | | | | | | | | | | | | | |
| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | (In thousands) | |
Share-based compensation expense funded Dean Foods | | | | | | | | | | | | | | | | |
Dean Foods stock options | | $ | — | | | $ | 276 | | | $ | — | | | $ | 905 | |
Dean Foods RSUs | | | — | | | | 737 | | | | — | | | | 2,190 | |
Dean Foods CPUs | | | — | | | | 1,336 | | | | — | | | | 1,945 | |
Dean Foods phantom shares | | | — | | | | 138 | | | | — | | | | 1,808 | |
| | | | | | | | | | | | | | | | |
Total share-based compensation expense funded by Dean Foods | | $ | — | | | $ | 2,487 | | | $ | — | | | $ | 6,848 | |
| | | | | | | | | | | | | | | | |
The following table summarizes the share-based compensation expense recognized for the Company’s direct participants in the Dean Foods equity classified plans, as well as, expense related to the Company’s equity classified plans, in periods after the completion of our initial public offering: |
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| | | | | | | | | | | | | | | | |
| | Three months ended | | | Nine months ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | (In thousands) | |
Share-based compensation expense | | | | | | | | | | | | | | | | |
Dean Foods stock options | | $ | 219 | | | $ | — | | | $ | 739 | | | $ | — | |
Dean Foods RSUs | | | 401 | | | | — | | | | 1,187 | | | | — | |
Dean Foods phantom shares | | | 746 | | | | — | | | | 2,479 | | | | — | |
WhiteWave stock options | | | 1,172 | | | | — | | | | 5,502 | | | | — | |
WhiteWave RSUs | | | 1,337 | | | | — | | | | 5,633 | | | | — | |
WhiteWave phantom shares | | | 975 | | | | — | | | | 2,195 | | | | — | |
WhiteWave SARs | | | 267 | | | | — | | | | 664 | | | | — | |
| | | | | | | | | | | | | | | | |
Total share-based compensation expense | | $ | 5,117 | | | $ | — | | | $ | 18,399 | | | $ | — | |
| | | | | | | | | | | | | | | | |
Share-based compensation expense shown above for the Dean Foods equity plans reflect expenses for those legacy plans that have converted to equivalent WhiteWave equity plans upon the spin-off transaction. |
Share Repurchase Program |
Our board of directors has authorized a share repurchase program, under which the Company may repurchase up to $150 million of its common stock. The primary purpose of the program will be to offset dilution from the Company’s equity compensation plans, but the Company also may make discretionary purchases. Shares may be repurchased under the program from time to time in one or more open market or other transactions, at the discretion of the Company, subject to market conditions and other factors. The authorization to repurchase shares will end when the Company has repurchased the maximum amount of shares authorized, or the Company’s Board of Directors has determined to discontinue such repurchases. |