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Share-Based Compensation | 9 Months Ended
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Sep. 27, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Note 14 – Share-Based Compensation Zebra has a share-based compensation plan and a stock purchase plan. Zebra recognizes compensation costs using the straight-line method over the vesting period of up to 5 years. The compensation expense and the related tax benefit for share-based payments were included in the Consolidated Statement of Earnings as follows (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 27, 2014 |  |  | September 28, 2013 |  |  | September 27, 2014 |  |  | September 28, 2013 |
Cost of sales |  | $ | 243 |  |  | $ | 140 |  |  | $ | 725 |  |  | $ | 600 |
Selling and marketing |  |  | 612 |  |  |  | 491 |  |  |  | 1,681 |  |  |  | 1,497 |
Research and development |  |  | 381 |  |  |  | 406 |  |  |  | 1,121 |  |  |  | 1,190 |
General and administrative |  |  | 1,958 |  |  |  | 1,831 |  |  |  | 6,777 |  |  |  | 6,085 |
Total compensation |  | $ | 3,194 |  |  | $ | 2,868 |  |  | $ | 10,304 |  |  | $ | 9,372 |
Income tax benefit |  | $ | 1,077 |  |  | $ | 985 |  |  | $ | 3,511 |  |  | $ | 3,237 |
Cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized (excess tax benefits) are classified as financing cash flows in the statement of cash flows. The tax benefits classified as financing cash flows for the nine months ended September 27, 2014 were $5,779,000 and for the nine months ended September 28, 2013 were $4,170,000. The fair value of share-based compensation is estimated on the date of grant using a binomial model. Volatility is based on an average of the implied volatility in the open market and the annualized volatility of Zebra stock prices over our entire stock history. Stock option grants in the table below include both stock options, all of which were non-qualified, and stock appreciation rights (SARs) that will be settled in Zebra stock. Restricted stock grants are valued at the market closing price on the date of the grant. The following table shows the weighted-average assumptions used for grants of SARs as well as the fair value of the grants based on those assumptions:
|  | Nine Months Ended |
|  | September 27, 2014 |  |  | September 28, 2013 |
Expected dividend yield |  |  | 0% |  |  |  | 0% |
Forfeiture rate |  |  | 10.32% |  |  |  | 10.31% |
Volatility |  |  | 34.92% |  |  |  | 32.00% |
Risk free interest rate |  |  | 1.73% |  |  |  | .82% |
Range of interest rates |  |  | 0.02% - 2.61% |  |  |  | 0.02% - 1.78% |
Expected weighted-average life |  |  | 5.36 years |  |  |  | 5.42 years |
Fair value of stock appreciation rights (SARs) granted |  | $ | 4,600,000 |  |  | $ | 4,443,000 |
Weighted-average grant date fair value of SARs granted |  | $ | 25.00 |  |  | $ | 13.83 |
Stock option activity was as follows:
|  | Nine Months Ended September 27, 2014 |
Options |  | Shares |  |  | Weighted-Average Exercise Price |
Outstanding at beginning of year |  |  | 956,502 |  |  | $ | 42.77 |
Exercised |  |  | (355,640 | ) |  |  | 44.49 |
Outstanding at end of period |  |  | 600,862 |  |  | $ | 41.76 |
Exercisable at end of period |  |  | 600,862 |  |  | $ | 41.76 |
Intrinsic value of exercised options |  | $ | 9,451,000 |  |  |  |  |
The following table summarizes information about stock options outstanding at September 27, 2014:
|  | Outstanding |  |  | Exercisable |
Aggregate intrinsic value |  | $ | 17,481,000 |  |  | $ | 17,481,000 |
Weighted-average remaining contractual term |  |  | 1.9 years |  |  |  | 1.9 years |
SAR activity was as follows:
|  | Nine Months Ended September 27, 2014 |
SARs |  | Shares |  |  | Weighted-Average Exercise Price |
Outstanding at beginning of year |  |  | 1,402,784 |  |  | $ | 36.36 |
Granted |  |  | 183,932 |  |  |  | 74.69 |
Exercised |  |  | (245,454 | ) |  |  | 33.82 |
Forfeited |  |  | (20,674 | ) |  |  | 49.07 |
Outstanding at end of period |  |  | 1,320,588 |  |  | $ | 41.97 |
Exercisable at end of period |  |  | 607,616 |  |  | $ | 33.14 |
Intrinsic value of exercised SARs |  | $ | 9,958,000 |  |  |  |  |
The terms of the SARs are established under either the 2006 Incentive Compensation Plan or the 2011 Long-term Incentive Plan (the “Plans”) and the applicable SAR agreement. Once vested, a SAR entitles the holder to receive a payment equal to the difference between the per-share grant price of the SAR and the fair market value of a share of Zebra stock on the date the SAR is exercised, multiplied by the number of SARs exercised. Exercised SARs are settled in whole shares of Zebra stock, and any fraction of a share is settled in cash. The SARs granted typically vest annually in four equal amounts on each of the first four anniversaries of the grant date, with some SARs vesting over a period of five years. All SARs expire 10 years after the grant date. The following table summarizes information about SARs outstanding at September 27, 2014:
|  | Outstanding |  |  | Exercisable |
Aggregate intrinsic value |  | $ | 38,828,000 |  |  | $ | 22,910,000 |
Weighted-average remaining contractual term |  |  | 7.2 years |  |  |  | 6.3 years |
Restricted stock award activity granted under the Plans, are as follows:
|  | Nine Months Ended September 27, 2014 |
Restricted Stock Awards |  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Outstanding at beginning of year |  |  | 435,377 |  |  | $ | 40.92 |
Granted |  |  | 121,132 |  |  |  | 74.28 |
Released |  |  | (150,618 | ) |  |  | 43.16 |
Forfeited |  |  | (8,144 | ) |  |  | 52.80 |
Outstanding at end of period |  |  | 397,747 |  |  | $ | 50.00 |
The terms of Zebra’s restricted stock grants are defined in the Plans and the applicable award agreements. Restricted grants consist of time vested restricted stock awards (RSA’s), restricted stock units (RSU’s) and performance share awards (PSA’s). Zebra’s restricted stock awards and units are expensed over the vesting period of the related award, typically three to five years. Compensation cost is calculated as the market date fair value on the grant date multiplied by the number of shares granted. Restricted stock units of 8,992 were granted in the first nine months of 2014. Performance share award activity granted under the Plans, are as follows:
|  | Nine Months Ended September 27, 2014 |
Performance Share Awards |  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Outstanding at beginning of year |  |  | 195,159 |  |  | $ | 42.25 |
Granted |  |  | 4,323 |  |  |  | 69.41 |
Released |  |  | (33,535 | ) |  |  | 41.45 |
Forfeited |  |  | (20,555 | ) |  |  | 41.45 |
Outstanding at end of period |  |  | 145,392 |  |  | $ | 43.36 |
|  | As of |
|  | September 27, 2014 |
Awards granted under Zebra’s equity-based compensation plans: |  |  |  |
Unearned compensation costs related to awards granted |  | $ | 19,545,000 |
Period expected to be recognized over |  |  | 2.2 years |
The fair value of the purchase rights issued under the stock purchase plan is estimated using the following weighted-average assumptions for purchase rights granted. Expected lives of three months to one year have been used along with these assumptions.
|  | Nine Months Ended |
|  | September 27, 2014 |  |  | September 28, 2013 |
Fair market value |  | $ | 63.42 |  |  | $ | 41.69 |
Option price |  | $ | 60.25 |  |  | $ | 39.61 |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 31 | % |  |  | 17 | %
Risk free interest rate |  |  | 0.06 | % |  |  | 0.05 | %

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- Definition Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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