Equity-Based Compensation | 6 Months Ended |
Jun. 29, 2014 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Equity-Based Compensation | ' |
NOTE L – Equity-Based Compensation |
At June 29, 2014, CTS had five equity-based compensation plans: the 2001 Stock Option Plan (“2001 Plan”), the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), and the 2014 Performance & Incentive Plan (“2014 Plan”). Future grants can only be made under the 2014 Plan. |
The 2009 Plan, and previously the 2001 Plan and 2004 Plan, provides for grants of incentive stock options or nonqualified stock options to officers, key employees, and nonemployee members of CTS’ Board of Directors. In addition, the 2009 Plan and the 2004 Plan allow for grants of stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, and other stock awards. |
The following table summarizes the compensation expense included in the Unaudited Condensed Consolidated Statements of Earnings for the three and six months ended June 29, 2014 and June 30, 2013, respectively, relating to equity-based compensation plans: |
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| | Three Months Ended | | | Six Months Ended | |
($ in thousands) | | June 29, 2014 | | | June 30, 2013 | | | June 29, 2014 | | | June 30, 2013 | |
| | | | |
Stock options | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Service-Based RSUs | | | 210 | | | | 693 | | | | 683 | | | | 1,517 | |
Performance-Based RSUs | | | 99 | | | | 279 | | | | 273 | | | | 573 | |
Market-Based RSUs | | | 91 | | | | 191 | | | | 223 | | | | 391 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 400 | | | $ | 1,163 | | | $ | 1,179 | | | $ | 2,481 | |
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The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted average period in which the expense is to be recognized: |
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($ in thousands) | | Unrecognized | | | Weighted average | | | | | | | | | | |
compensation expense | period | | | | | | | | | | |
at June 29, 2014 | | | | | | | | | | | |
Stock options | | $ | — | | | 0.0 years | | | | | | | | | | |
Service-Based RSUs | | | 1,771 | | | 1.2 years | | | | | | | | | | |
Performance-Based RSUs | | | 1,210 | | | 1.5 years | | | | | | | | | | |
Market-Based RSUs | | | 892 | | | 1.5 years | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 3,873 | | | | | | | | | | | | | |
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CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. |
The following table summarizes the status of these plans as of June 29, 2014: |
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| | 2014 Plan | | | 2009 Plan | | | 2004 Plan | | | 2001 Plan | |
Awards originally available | | | 1,500,000 | | | | 3,400,000 | | | | 6,500,000 | | | | 2,000,000 | |
Stock options outstanding | | | | | | | | | | | 5,200 | | | | — | |
Restricted stock units outstanding | | | | | | | 434,082 | | | | 101,223 | | | | | |
Options exercisable | | | | | | | | | | | 5,200 | | | | — | |
Awards available for grant | | | 1,500,000 | | | | 1,589,756 | | | | 106,423 | | | | | |
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Stock Options |
Stock options are exercisable in cumulative annual installments over a maximum 10-year period, commencing at least one year from the date of grant. Stock options are generally granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The stock options generally vest over four years and have a 10-year contractual life. The awards generally contain provisions to either accelerate vesting or allow vesting to continue on schedule upon retirement if certain service and age requirements are met. The awards also provide for accelerated vesting if there is a change in control event. |
A summary of the status of stock options as of June 29, 2014 and the six-month period then ended is presented below: |
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| | June 29, 2014 | | | | | | | | | |
| | Options | | | Weighted- | | | | | | | | | |
Average | | | | | | | | |
Exercise Price | | | | | | | | |
Outstanding at beginning of year | | | 123,000 | | | $ | 12.78 | | | | | | | | | |
Exercised | | | (115,100 | ) | | $ | 12.84 | | | | | | | | | |
Expired | | | (2,700 | ) | | $ | 11.04 | | | | | | | | | |
Forfeited | | | — | | | $ | — | | | | | | | | | |
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Outstanding at end of period | | | 5,200 | | | $ | 12.35 | | | | | | | | | |
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Exercisable at end of period | | | 5,200 | | | $ | 12.35 | | | | | | | | | |
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| | Six Months Ended | | | | | | | | | | | | | |
| | 29-Jun-14 | | | | | | | | | | | | | |
Intrinsic values of share options exercised | | $ | 831,000 | | | | | | | | | | | | | |
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Weighted average remaining contractual life | | | 1.4 years | | | | | | | | | | | | | |
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Aggregate intrinsic values of options outstanding and options exercisable | | $ | 32,000 | | | | | | | | | | | | | |
There are no unvested stock options at June 29, 2014. |
Service-Based Restricted Stock Units |
Service-based RSUs entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers, key employees and non-employee directors as compensation. Generally, the RSUs vest over a three-year period. A summary of the status of RSUs is presented below: |
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| | Six months ended June 29, 2014 | | | | | | | | | |
| | RSUs | | | Weighted- | | | | | | | | | |
average | | | | | | | | |
Grant-Date | | | | | | | | |
Fair Value | | | | | | | | |
Outstanding at beginning of year | | | 630,288 | | | $ | 10.36 | | | | | | | | | |
Granted | | | 83,615 | | | $ | 19.13 | | | | | | | | | |
Converted | | | (123,279 | ) | | $ | 10.79 | | | | | | | | | |
Forfeited | | | (55,319 | ) | | $ | 11.95 | | | | | | | | | |
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Outstanding at end of period | | | 535,305 | | | $ | 11.47 | | | | | | | | | |
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Weighted-average remaining contractual life | | | 11.2 years | | | | | | | | | | | | | |
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Performance-Based Restricted Stock Units |
CTS grants performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount. Vesting is subject to certification of the fiscal results of the year prior to the target year by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of either sales growth targets or cash flow targets as noted in the table below. |
Performance-Based RSUs include the following components: |
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Grant Date | | Target Units | | | Vesting Year | | Vesting Dependency | | Units Awarded | | | | | |
February 8, 2012 | | | 45,850 | | | 2014 | | Salesgrowth | | | — | | | | | |
February 8, 2012 | | | 39,300 | | | 2014 | | Cashflow | | | 69,600 | | | | | |
February 11, 2013 | | | 77,700 | | | 2016 | | Salesgrowth | | | — | | | | | |
February 11, 2013 | | | 66,600 | | | 2016 | | Cash flow | | | — | | | | | |
February 14, 2014 | | | 25,085 | | | 2017 | | Sales growth | | | — | | | | | |
February 14, 2014 | | | 21,500 | | | 2017 | | Cash flow | | | — | | | | | |
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Market-Based Restricted Stock Units |
CTS grants market-based restricted stock unit awards for certain executives and key employees. Vesting may occur in the range from zero percent to 200% of the target amount. Vesting is subject to certification of the fiscal results of the year prior to the target year by CTS’ independent auditors. The vesting rate will be determined using a matrix based on a percentile ranking of CTS total stockholder return with peer group total shareholder return over a three-year period. Vesting is tied exclusively to CTS total stockholder return relative to peer group companies’ total stockholder return rates. |
Market-Based RSUs include the following components: |
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Grant Date | | Target Units | | | Vesting Year | | Number of Peer | | Units Awarded | | | | | |
Group Companies | | | | |
February 8, 2012 | | | 45,850 | | | 2014 | | 28 | | | 63,800 | | | | | |
February 11, 2013 | | | 77,700 | | | 2016 | | 20 | | | — | | | | | |
February 11, 2013 | | | 32,500 | | | 2016 | | 20 | | | — | | | | | |
February 14, 2014 | | | 25,085 | | | 2017 | | 15 | | | — | | | | | |