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Stock-Based Compensation | 6 Months Ended
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Jul. 04, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-Based Compensation |
11. | STOCK-BASED COMPENSATION: Stock Options – Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted are generally exercisable at the end of three years and have a term of 10 years. New shares are issued upon exercise of stock options.
A summary of activity under Nucor’s stock option plans for the first six months of 2015 is as follows (in thousands, except year and per share amounts):
|  | Shares |  |  | Weighted - Average Exercise Price |  |  | Weighted - Average Remaining Contractual Life |  |  | Aggregate Intrinsic Value |
Number of shares under option: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at beginning of year |  |  | 2,422 |  |  | $ | 42.39 |  |  |  |  |  |  |  |  |
Granted |  |  | 700 |  |  | $ | 47.59 |  |  |  |  |  |  |  |  |
Exercised |  |  | (10 | ) |  | $ | 42.34 |  |  |  |  |  |  | $ | 66 |
Canceled |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Outstanding at July 4, 2015 |  |  | 3,112 |  |  | $ | 43.56 |  |  |  | 7.7 years |  |  | $ | 7,526 |
Options exercisable at July 4, 2015 |  |  | 1,551 |  |  | $ | 39.49 |  |  |  | 6.2 years |  |  | $ | 7,526 |
For the 2015 stock option grant, the grant date fair value of $11.71 per share was calculated using the Black-Scholes option-pricing model with the following assumptions:
Exercise price |  | $ | 47.59 |
Expected dividend yield |  |  | 3.13 | %
Expected stock price volatility |  |  | 33.32 | %
Risk-free interest rate |  |  | 1.86 | %
Expected life (years) |  |  | 6.5 |
Stock options granted to employees who are eligible for retirement on the date of grant are expensed immediately since these awards vest upon retirement from the Company. Retirement, for purposes of vesting in these stock options, means termination of employment after satisfying age and years of service requirements. Similarly, stock options granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible. Compensation expense for stock options granted to employees who are not retirement-eligible is recognized on a straight-line basis over the vesting period. Compensation expense for stock options was $7.0 million and $7.6 million in the second quarter of 2015 and 2014, respectively, and $7.1 million and $7.6 million in the first six months of 2015 and 2014, respectively. As of July 4, 2015, unrecognized compensation expense related to options was $1.5 million, which is expected to be recognized over a weighted-average period of 2.7 years. Restricted Stock Units – Nucor annually grants restricted stock units (RSUs) to key employees, officers and non-employee directors. The RSUs typically vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. A portion of the RSUs awarded to senior officers vest upon the officer’s retirement. Retirement, for purposes of vesting in these units only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of service requirements. RSUs granted to non-employee directors are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the Board of Directors. RSUs granted to employees who are eligible for retirement on the date of grant are expensed immediately, and RSUs granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who are not retirement-eligible is recognized on a straight-line basis over the vesting period. Cash dividend equivalents are paid to participants each quarter. Dividend equivalents paid on RSUs expected to vest are recognized as a reduction in retained earnings. The fair value of an RSU is determined based on the closing stock price of Nucor’s common stock on the date of the grant. A summary of Nucor’s RSU activity for the first six months of 2015 is as follows (shares in thousands):
|  | Shares |  |  | Grant Date Fair Value |
Restricted stock units: |  |  |  |  |  |  |  |
Unvested at beginning of year |  |  | 1,012 |  |  | $ | 45.98 |
Granted |  |  | 790 |  |  | $ | 47.59 |
Vested |  |  | (731 | ) |  | $ | 44.92 |
Canceled |  |  | (9 | ) |  | $ | 46.01 |
Unvested at July 4, 2015 |  |  | 1,062 |  |  | $ | 47.91 |
Shares reserved for future grants (stock options and RSUs) |  |  | 10,343 |  |  |  |  |
Compensation expense for RSUs was $19.1 million and $17.6 million in the second quarter of 2015 and 2014, respectively, and $24.4 million and $22.5 million in the first six months of 2015 and 2014, respectively. As of July 4, 2015, unrecognized compensation expense related to unvested RSUs was $41.5 million, which is expected to be recognized over a weighted-average period of 2.5 years.
| Restricted Stock Awards – Nucor’s Senior Officers Long-Term Incentive Plan (LTIP) and Annual Incentive Plan (AIP) authorize the award of shares of common stock to officers subject to certain conditions and restrictions.
The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age 55 while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period. The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up to one-half of an annual incentive award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age 55 while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor. A summary of Nucor’s restricted stock activity under the AIP and the LTIP for the first six months of 2015 is as follows (shares in thousands):
|  | Shares |  |  | Grant Date Fair Value |
Restricted stock awards and units: |  |  |  |  |  |  |  |
Unvested at beginning of year |  |  | 65 |  |  | $ | 48.20 |
Granted |  |  | 136 |  |  | $ | 47.07 |
Vested |  |  | (134 | ) |  | $ | 47.11 |
Canceled |  |  | — |  |  |  | — |
Unvested at July 4, 2015 |  |  | 67 |  |  | $ | 48.08 |
Shares reserved for future grants |  |  | 975 |  |  |  |  |
Compensation expense for common stock and common stock units awarded under the AIP and LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $1.2 million and $1.9 million in the second quarter of 2015 and 2014, respectively, and $2.3 million and $3.1 million in the first six months of 2015 and 2014 respectively. As of July 4, 2015, unrecognized compensation expense related to unvested restricted stock awards was $1.1 million, which is expected to be recognized over a weighted-average period of 1.9 years.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 3: 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 Reference 4: 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 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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