Share-based Compensation Plans | Share-based compensation plans The Company provides share-based compensation to certain employees and non-employee directors in the form of stock appreciation rights, restricted stock units and other share-based awards. Beginning in 2014, share-based awards were issued pursuant to the Sonoco Products Company 2014 Long-Term Incentive Plan (the “2014 Plan”), which became effective upon approval by the shareholders on April 16, 2014. Awards issued from 2012 through 2013 were issued pursuant to the Sonoco Products Company 2012 Long-Term Incentive Plan (the “2012 Plan”) and awards issued from 2009 through 2011 were issued pursuant to the Sonoco Products Company 2008 Long-Term Incentive Plan (the “2008 Plan”). Awards issued prior to 2009 were issued pursuant to the 1991 Key Employee Stock Plan (the “1991 Plan”) or the 1996 Non-Employee Directors Stock Plan (the “1996 Plan”). The maximum number of shares of common stock that may be issued under the 2014 Plan was originally set at 10,381,533 shares, which includes all shares then remaining under the 2012 Plan and an additional 4,500,000 shares authorized under the 2014 Plan. Awards granted under all previous plans which are forfeited, expire or are cancelled without delivery of shares, or which result in forfeiture of shares back to the Company, will be added to the total shares available under the 2014 Plan. At December 31, 2016 , a total of 7,522,658 shares remain available for future grant under the 2014 Plan. The Company issues new shares for stock appreciation right exercises and stock unit conversions. The Company’s stock-based awards to non-employee directors have not been material. Accounting for share-based compensation Total compensation cost for share-based payment arrangements was $19,289 , $9,257 and $17,099 , for 2016 , 2015 and 2014 , respectively. The related tax benefit recognized in net income was $7,040 , $3,379 , and $6,414 , for the same years, respectively. Share-based compensation expense is included in “Selling, general and administrative expenses” in the Consolidated Statements of Income. An “excess” tax benefit is created when the tax deduction for an exercised stock appreciation right, exercised stock option or converted stock unit exceeds the compensation cost that has been recognized in income. For the years 2016, 2015, and 2014, the excess tax benefits were not recognized on the income statement, but rather on the consolidated balance sheet within the line item “Capital in excess of stated value.” The additional net excess tax benefit realized was $2,695 , $3,622 and $4,126 for 2016 , 2015 and 2014 , respectively. Stock appreciation rights and stock options Beginning in 2015, stock appreciation rights (SARs) granted vest over three years and expense is recognized following the graded-vesting method, which results in front-loaded expense being recognized during the early years of the required service period. Unvested SARs are cancelable upon termination of employment, except in the case of death, disability, or involuntary termination within two years of a change in control. SARs granted prior to 2015 vested over one year . Since 2006, the Company has granted stock appreciation rights (SARs) annually on a discretionary basis to key employees. These SARs are granted at market (have an exercise price equal to the closing market price on the date of the grant) and can be settled only in stock. The SARs granted in 2016 and 2015 vest over three years , with one-third vesting on each anniversary date of the grant, and have 10 -year terms, while the SARs granted from 2006 through 2014 vested over one year and have seven -year terms. As of December 31, 2016 , unrecognized compensation cost related to nonvested SARs totaled $2,447 . This cost will be recognized over the remaining weighted-average vesting period of approximately 24 months. Noncash stock-based compensation associated with SARs and stock options totaled $2,878 , $2,750 , and $4,488 for 2016, 2015, and 2014, respectively. The aggregate intrinsic value of SARS exercised during 2016, 2015, and 2014 was $9,510 , $11,888 , and $13,831 , respectively. The weighted-average grant date fair value of SARs granted was $5.04 , $6.49 and $4.72 per share in 2016 , 2015 and 2014 , respectively. The Company computed the estimated fair values of all SARs using the Black-Scholes option-pricing model applying the assumptions set forth in the following table: 2016 2015 2014 Expected dividend yield 3.5 % 2.8 % 3.0 % Expected stock price volatility 18.5 % 18.2 % 18.4 % Risk-free interest rate 1.3 % 1.7 % 1.2 % Expected life of SARs 6 years 6 years 4 years The assumptions employed in the calculation of the fair value of SARs were determined as follows: • Expected dividend yield – the Company’s annual dividend divided by the stock price at the time of grant. • Expected stock price volatility – based on historical volatility of the Company’s common stock measured weekly for a time period equal to the expected life. • Risk-free interest rate – based on U.S. Treasury yields in effect at the time of grant for maturities equal to the expected life. • Expected life – calculated using the simplified method as prescribed in U.S. GAAP, where the expected life is equal to the sum of the vesting period and the contractual term divided by two. The activity related to the Company’s SARs is as follows: Nonvested Vested Total Weighted- average Exercise Price Outstanding, December 31, 2015 593,443 1,413,069 2,006,512 $ 40.35 Vested (197,371 ) 197,371 — Granted 820,266 — 820,266 $ 40.41 Exercised — (837,573 ) (837,573 ) $ 38.57 Forfeited/Expired (69,589 ) (3,970 ) (73,559 ) $ 44.17 Outstanding, December 31, 2016 1,146,749 768,897 1,915,646 $ 41.06 Exercisable, December 31, 2016 — 768,897 768,897 $ 40.53 The weighted average remaining contractual life for SARs outstanding and exercisable at December 31, 2016 was 7 years and 4.5 years, respectively. The aggregate intrinsic value for SARs outstanding and exercisable at December 31, 2016 was $22,200 and $10,323 , respectively. At December 31, 2016 , the fair market value of the Company’s stock used to calculate intrinsic value was $52.70 per share. There were no stock options outstanding at December 31, 2016 . The aggregate intrinsic value of stock options exercised during 2015 and 2014 was $975 and $3,497 , respectively. Cash received by the Company on option exercises was $1,324 and $5,951 for 2015 and 2014, respectively. There were no stock options exercised during 2016. Performance-based stock awards The Company grants performance contingent restricted stock units (PCSUs) annually on a discretionary basis to executive officers and certain key management employees. The ultimate number of PCSUs awarded is dependent upon the degree to which performance, relative to defined targets related to earnings and return on net assets employed, are achieved over a three-year performance cycle. PCSUs granted in 2015 and afterwards vest at the end of the three -year performance period if the respective performance targets are met. No units will be awarded if the performance targets are not met. For PCSUs granted in 2014 and earlier, units awarded vested at the end of the three-year performance period if the respective performance targets were met. In the event performance targets were not met, a minimum number of outstanding units were awarded and vested at the end of the performance period, 50% of the remaining number of threshold shares vested at the end of the fourth year and the remaining 50% at the end of the fifth year. Regardless of grant date, upon vesting, PCSUs are convertible into common shares on a one-for-one basis. Except in the event of the participant's death, disability, or retirement, if a participant is not employed by the Company at the end of the performance period, no PCSU's will vest. However, in the event of the participant’s death, disability or retirement prior to full vesting, shares will be issued on a pro rata basis up through the time the participant’s employment or service ceases. In the event of a change in control, as defined under the 2014 Plan, all unvested PCSUs will vest at target on a pro rata basis if the change in control occurs during the three-year performance period. The activity related to performance contingent restricted stock units is as follows: Nonvested Vested Total Average Grant Date Fair Value per Share Outstanding, December 31, 2015 350,510 524,985 875,495 $32.12 Granted 188,181 — 188,181 $36.33 Performance adjustments 207,583 — 207,583 $40.77 Vested (251,694 ) 251,694 — Converted — (201,246 ) (201,246 ) $28.38 Cancelled (8,535 ) (33,798 ) (42,333 ) $30.26 Dividend equivalents — 9,385 9,385 $48.20 Outstanding, December 31, 2016 486,045 551,020 1,037,065 $35.56 2016 PCSU. As of December 31, 2016, the 2016 PCSUs to be awarded are estimated to range from 0 to 373,522 units and are tied to the three-year performance period ending December 31, 2018. 2015 PCSU. As of December 31, 2016, the 2015 PCSUs to be awarded are estimated to range from 0 to 334,382 units and are tied to the three-year performance period ending December 31, 2017. 2014 PCSU. The three-year performance cycle for the 2014 PCSUs was completed on December 31, 2016. Outstanding stock units of 247,554 units were determined to have been earned, all of which qualified for vesting on December 31, 2016. The fair value of these units was $13,046 as of December 31, 2016. 2013 PCSU. The three-year performance cycle for the 2013 PCSUs was completed on December 31, 2015. Based on performance and the terms of the awards as of December 31, 2015, 205,673 stock units were determined to have been earned, all of which qualified for vesting on December 31, 2015. The fair value of these units was $8,406 as of December 31, 2015. 2012 PCSU. The three-year performance cycle for the 2012 PCSUs was completed on December 31, 2014. Based on the performance achieved and the terms of the award, 143,519 stock units qualified for vesting on December 31, 2014 with a fair value of $6,272 . A total of 4,387 units vested on December 31, 2015, and 4,140 units vested on December 31, 2016. The fair value of the stock units vesting in 2015 and 2016 was $179 and $218 , respectively. 2011 PCSU. The three-year performance cycle for the 2011 PCSUs was completed on December 31, 2013. Based on the performance achieved and the terms of the award, 123,414 stock units were awarded. A total of 61,707 stock units vested on December 31, 2014, with the remaining 61,707 stock units vesting on December 31, 2015. The fair value of the stock units vesting in 2014 and 2015 was $2,697 and $2,522 , respectively. The weighted-average grant-date fair value of PCSUs granted was $36.33 , $42.44 , and $38.04 per share in 2016, 2015 and 2014, respectively. Noncash stock-based compensation associated with PCSUs totaled $10,568 , $2,271 and $9,719 for 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , there was approximately $8,854 of total unrecognized compensation cost related to nonvested PCSUs. This cost is expected to be recognized over a weighted-average period of 20 months . Restricted stock awards In 2016 and 2015, the Company granted awards of restricted stocks units (RSUs) to executive officers and certain key management employees. These awards vest over a three -year period with one-third vesting on each anniversary date of the grant. Participants must be actively employed by the Company on the vesting date for shares to be issued, except in the event of the participant’s death, disability, or involuntary termination within two years of a change in control prior to full vesting, in which case shares will immediately vest. Once vested, these awards do not expire. Prior to 2015, the Company from time to time granted RSUs to certain of its executive officers and directors. These awards normally vested over a five -year period with one-third vesting on each of the third, fourth and fifth anniversaries of the grant, but in some circumstances vested over a shorter period. A participant must be actively employed by, or serving as a director of, the Company on the vesting date for shares to be issued. However, certain award agreements provided that in the event of the participant’s death, disability or retirement prior to full vesting, shares would be issued on a pro rata basis up through the time the participant’s employment or service ceases. Officers and directors can elect to defer receipt of RSUs, but key management employees are required to take receipt of stock issued. The weighted-average grant-date fair value of RSUs granted was $38.40 , $43.35 and $39.14 per share in 2016, 2015 and 2014, respectively. The fair value of shares vesting during the year was $1,291 , $2,066 , and $1,094 for 2016, 2015, and 2014, respectively. Noncash stock-based compensation associated with restricted stock grants totaled $3,122 , $2,336 and $1,153 for 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , there was $2,856 of total unrecognized compensation cost related to nonvested restricted stock units. This cost is expected to be recognized over a weighted-average period of 24 months . The activity related to restricted stock units is as follows: Nonvested Vested Total Average Grant Date Fair Value Per Share Outstanding, December 31, 2015 157,766 158,169 315,935 $ 34.90 Granted 96,356 — 96,356 $ 38.40 Vested (36,173 ) 36,173 — Converted — (20,732 ) (20,732 ) $ 36.19 Cancelled (8,197 ) — (8,197 ) $ 42.15 Dividend equivalents 594 4,900 5,494 $ 56.54 Outstanding, December 31, 2016 210,346 178,510 388,856 $ 35.85 Deferred compensation plans Certain officers of the Company receive a portion of their compensation, either current or deferred, in the form of stock units. Units are granted as of the day the cash compensation would have otherwise been paid using the closing price of the Company’s common stock on that day. Deferrals into stock equivalent units are converted into phantom stock equivalents as if Sonoco shares were actually purchased. The units immediately vest and earn dividend equivalents. Units are distributed in the form of common stock upon retirement over a period elected by the employee. Non-employee directors may elect to defer a portion of their cash retainer or other fees (except chair retainers) into phantom stock equivalent units as if Sonoco shares were actually purchased. The deferred stock equivalent units accrue dividend equivalents, and are issued in shares of Sonoco common stock six months following termination of Board service. Directors must elect to receive these deferred distributions in one, three or five annual installments. The activity related to deferred compensation for equity award units granted to both employees and non-employee directors combined is as follows: Total Outstanding, December 31, 2015 285,098 Deferred 46,780 Converted (14,567 ) Dividend equivalents 5,967 Outstanding, December 31, 2016 323,278 Deferred compensation for employees and directors of $2,721 , $1,947 , and $1,850 , which will be settled in Company stock at retirement, was deferred during 2016 , 2015 , and 2014 , respectively. |