Share-Based Compensation | 6 Months Ended |
Jun. 30, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Share-Based Compensation | ' |
Share-Based Compensation |
During the six months ended June 30, 2014, the Company granted approximately 0.5 million stock options, 0.2 million unvested shares and 0.1 million performance share units. During the six months ended June 30, 2013, the Company granted approximately 0.6 million stock options, 0.2 million unvested shares and 0.1 million performance share units. |
Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model. |
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| Three Months Ended | | | | | | | | | | | | |
June 30, | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | |
Weighted average fair value of option grants | $19.34 | | $13.28 | | | | | | | | | | | | |
Dividend yield | 1.43% | | 1.51% | | | | | | | | | | | | |
Volatility | 30.43% | | 30.76% | | | | | | | | | | | | |
Risk-free forward interest rate | 0.10% - 4.17% | | 0.14% - 3.94% | | | | | | | | | | | | |
Expected life (in years) | 5.87 | | 5.84 | | | | | | | | | | | | |
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| Six Months Ended | | | | | | | | | | | | |
June 30, | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | |
Weighted average fair value of option grants | $19.53 | | $12.85 | | | | | | | | | | | | |
Dividend yield | 1.26% | | 1.57% | | | | | | | | | | | | |
Volatility | 30.36% | | 30.94% | | | | | | | | | | | | |
Risk-free forward interest rate | 0.12% - 4.67% | | 0.17% - 4.10% | | | | | | | | | | | | |
Expected life (in years) | 5.89 | | 5.87 | | | | | | | | | | | | |
Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model. |
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| Three and Six Months Ended | | | | | | | | | | | | |
June 30, | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | |
Weighted average fair value of performance share units | $94.55 | | $50.45 | | | | | | | | | | | | |
Dividend yield | 0.00% | | 0.00% | | | | | | | | | | | | |
Volatility | 26.41% | | 28.99% | | | | | | | | | | | | |
Risk-free forward interest rate | 0.65% | | 0.40% | | | | | | | | | | | | |
Expected life (in years) | 2.88 | | 2.87 | | | | | | | | | | | | |
Total compensation cost for stock options is as follows: |
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| Three Months Ended | | Six Months Ended |
June 30, | June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Cost of goods sold | $ | 133 | | | $ | 99 | | | $ | 375 | | | $ | 291 | |
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Selling, general and administrative expenses | 1,425 | | | 1,253 | | | 3,615 | | | 3,421 | |
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Total expense before income taxes | 1,558 | | | 1,352 | | | 3,990 | | | 3,712 | |
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Income tax benefit | (496 | ) | | (445 | ) | | (1,251 | ) | | (1,182 | ) |
Total expense after income taxes | $ | 1,062 | | | $ | 907 | | | $ | 2,739 | | | $ | 2,530 | |
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Total compensation cost for unvested shares is as follows: |
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| Three Months Ended | | Six Months Ended |
June 30, | June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Cost of goods sold | $ | 693 | | | $ | 212 | | | $ | 1,165 | | | $ | 614 | |
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Selling, general and administrative expenses | 2,578 | | | 2,098 | | | 5,324 | | | 4,758 | |
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Total expense before income taxes | 3,271 | | | 2,310 | | | 6,489 | | | 5,372 | |
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Income tax benefit | (644 | ) | | (609 | ) | | (1,331 | ) | | (1,319 | ) |
Total expense after income taxes | $ | 2,627 | | | $ | 1,701 | | | $ | 5,158 | | | $ | 4,053 | |
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Total compensation cost for performance share units is as follows: |
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| Three Months Ended | | Six Months Ended |
June 30, | June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Cost of goods sold | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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Selling, general and administrative expenses | 823 | | | 216 | | | 1,484 | | | 405 | |
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Total expense before income taxes | 823 | | | 216 | | | 1,484 | | | 405 | |
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Income tax benefit | (288 | ) | | (77 | ) | | (474 | ) | | (114 | ) |
Total expense after income taxes | $ | 535 | | | $ | 139 | | | $ | 1,010 | | | $ | 291 | |
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The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees. |
As of June 30, 2014, there was $12.8 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.5 years, $14.2 million of total unrecognized compensation cost related to unvested shares/units that is expected to be recognized over a weighted-average period of 1.1 years, and $6.8 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.3 years. |
A summary of the Company’s stock option activity as of June 30, 2014, and changes during the six months ended June 30, 2014, is presented in the following table: |
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Stock Options | Shares | | Weighted | | Weighted-Average | | Aggregate | | | |
Average | Remaining | Intrinsic | | | |
Price | Contractual Term | Value | | | |
Outstanding at January 1, 2014 | 2,516,618 | | | $ | 39.6 | | | 6.87 | | $ | 86,200,655 | | | | |
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Granted | 505,950 | | | 72.75 | | | | | | | | |
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Exercised | (254,815 | ) | | 34.71 | | | | | | | | |
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Forfeited/Expired | (85,483 | ) | | 49.52 | | | | | | | | |
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Outstanding at June 30, 2014 | 2,682,270 | | | $ | 46 | | | 7.04 | | $ | 93,185,771 | | | | |
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Vested and expected to vest as of June 30, 2014 | 2,521,604 | | | $ | 45.12 | | | 6.93 | | $ | 89,815,814 | | | | |
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Exercisable at June 30, 2014 | 1,372,277 | | | $ | 36.13 | | | 5.55 | | $ | 61,210,657 | | | | |
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