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Stock-Based Compensation
 12 Months Ended
Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
STOCK-BASED COMPENSATION
Incentive Equity Awards. The Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan (the “2007 Plan”) provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock awards, stock bonuses and performance compensation awards to employees, non-employee directors, and other key individuals who perform services for the Company. The Company accounts for stock-based compensation in accordance with ASC No. 718, which requires the measurement of stock-based compensation expense to be recognized in Net earnings based on the fair value of the award on the date of grant. In accordance with the 2007 Plan, the Company’s stock-based compensation consists of the following:
Stock Options: Stock options are granted to employees at exercise prices equal to the fair market value of the Company’s common stock on the dates of grant. Stock options are generally issued under a graded vesting schedule, meaning that they vest ratably over four years, and have a term of 10 years. A portion of the stock options granted in fiscal year 2014 have a cliff vesting schedule meaning that they vest in four years from the grant date and have a term of 10 years. Compensation expense for stock options under a graded vesting schedule is recognized over the requisite service period for each separately vesting portion of the stock option award. Compensation expense for stock options under a cliff vesting schedule is recognized equally over the four year vesting period with 25 percent of the cost recognized over each 12 month period.
Time-based Restricted Stock Units: The Company has a time-based restricted stock unit (“RSU”) program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. Time-based RSUs typically vest two and one-half years from the date of grant. The Company records stock compensation expense for time-based RSUs on a straight-line basis over the vesting period.
Performance-based Restricted Stock Units: The Company has a performance-based RSU program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. RSUs vest upon the achievement by the Company of specific performance metrics. The Company records stock compensation expense for performance-based RSUs on a straight-line basis over the performance period, plus a subsequent vesting period, which typically totals approximately two and one-half years from the date of grant.
The activity related to the Company’s incentive equity awards for the fiscal years ended June 30, 2015, 2014 and 2013 consisted of the following:
 
 
Stock Options
 
Time-based
RSUs
 
Performance-based
RSUs
 
 
Number
of
Options
 
Weighted
Average
Exercise
Price
 
Number
of
Shares
 
Weighted
Average
Grant-Date
Fair Value
 
Number
of
Shares
 
Weighted
Average
Grant-Date
Fair Value
Balances at July 1, 2012
 
12,381,488

 
$
19.42

 
2,025,569

 
$
19.61

 
703,195

 
$
20.39

Granted
 
1,497,855

 
22.51

 
1,093,856

 
21.32

 
246,894

 
21.25

Exercised (a)
 
(2,724,439
)
 
17.23

 
—

 
—

 
—

 
—

Vesting of RSUs (b)
 
—

 
—

 
(907,922
)
 
21.62

 
(259,431
)
 
21.70

Expired/forfeited
 
(169,422
)
 
18.82

 
(124,669
)
 
19.38

 
(117,835
)
 
21.42

Balances at June 30, 2013
 
10,985,482

 
$
20.39

 
2,086,834

 
$
19.65

 
572,823

 
$
19.96

Granted
 
1,683,875

 
36.88

 
906,061

 
30.46

 
348,997

 
30.93

Exercised (a)
 
(2,686,105
)
 
18.46

 
—

 
—

 
—

 
—

Vesting of RSUs (b)
 
—

 
—

 
(961,930
)
 
17.78

 
(237,189
)
 
17.73

Expired/forfeited
 
(135,961
)
 
20.89

 
(164,557
)
 
21.60

 
(22,349
)
 
27.10

Balances at June 30, 2014
 
9,847,291

 
$
23.73

 
1,866,408

 
$
25.69

 
662,282

 
$
26.30

Granted
 
1,075,759

 
50.10

 
748,582

 
39.66

 
254,440

 
35.89

Exercised (a)
 
(3,140,921
)
 
19.79

 
—

 
—

 
—

 
—

Vesting of RSUs (b)
 
—

 
—

 
(945,506
)
 
21.89

 
(357,515
)
 
21.29

Expired/forfeited
 
(108,182
)
 
26.49

 
(143,024
)
 
29.81

 
(11,342
)
 
30.27

Balances at June 30, 2015 (c)
 
7,673,947

 
$
29.00

 
1,526,460

 
$
34.51

 
547,865

 
$
33.94

 
(a)
Stock options exercised during the fiscal years ended June 30, 2015, 2014 and 2013 had intrinsic values of $86.2 million, $49.9 million and $19.8 million, respectively.
(b)
Time-based RSUs that vested during the fiscal years ended June 30, 2015, 2014 and 2013 had a total fair value of $51.5 million, $36.5 million and $22.1 million, respectively. Performance-based RSUs that vested during the fiscal years ended June 30, 2015, 2014 and 2013 had a total fair value of $19.2 million, $8.9 million and $6.3 million, respectively.
(c)
As of June 30, 2015, the Company’s outstanding “in the money” vested stock options using the fiscal year-end share price of $50.01 (approximately 4.5 million shares) had an aggregate intrinsic value of $120.2 million. As of June 30, 2015, time-based RSUs and performance-based RSUs expected to vest using the fiscal year-end share price of $50.01 (approximately 1.4 million and 0.5 million shares, respectively) had an aggregate intrinsic value of $69.5 million and $26.6 million, respectively.
The tables below summarize information regarding the Company’s outstanding and exercisable stock options as of June 30, 2015:
 
 
Outstanding Options
 
 
Options
Outstanding
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price
Range of Exercise Prices
 
$0.01 to $16.00
 
189,305

 
3.44
 
$
14.40

$16.01 to $19.00
 
740,811

 
1.53
 
$
18.04

$19.01 to $22.00
 
1,049,912

 
4.07
 
$
21.25

$22.01 to $25.00
 
2,568,641

 
6.18
 
$
23.08

$25.01 to $28.00
 
418,016

 
5.04
 
$
25.74

$28.01 to $37.00
 
1,631,503

 
8.60
 
$
36.89

$37.01 to $46.00
 
136,630

 
9.33
 
$
44.24

$46.01 to $52.00
 
939,129

 
9.62
 
$
50.95

 
 
7,673,947

 
6.38
 
$
29.00

 
 
Exercisable Options
Range of Exercise Prices
 
Options
Exercisable
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price
$0.01 to $16.00
 
189,305

 
3.44
 
$
14.40

$16.01 to $19.00
 
740,811

 
1.53
 
$
18.04

$19.01 to $22.00
 
1,049,912

 
4.07
 
$
21.25

$22.01 to $25.00
 
1,728,390

 
5.86
 
$
23.20

$25.01 to $28.00
 
380,810

 
4.77
 
$
25.71

$28.01 to $37.00
 
240,140

 
8.53
 
$
36.73

$37.01 to $46.00
 
136,630

 
9.33
 
$
44.24

$46.01 to $52.00
 
3,087

 
9.87
 
$
51.43

 
 
4,469,085

 
4.78
 
$
23.12


Stock-based compensation expense of $38.6 million, $34.6 million, and $27.1 million was recognized in the Consolidated Statements of Earnings for the fiscal years ended June 30, 2015, 2014 and 2013, respectively, as well as related tax benefits of $14.5 million, $13.0 million, and $10.1 million, respectively.
As of June 30, 2015, the total remaining unrecognized compensation cost related to non-vested stock options and RSU awards amounted to $15.2 million and $31.9 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 3.0 years and 1.5 years, respectively.
In April 2013, the Company began reissuing treasury stock to satisfy stock option exercises and issuances under the Company’s RSU awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase programs. The Company repurchased 5.2 million shares in fiscal year 2015 under our share repurchase program as compared to 2.9 million shares repurchased in fiscal year 2014, which excludes shares withheld by the Company to cover payroll taxes on the vesting of RSU awards, which are also accounted for as treasury stock. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions.
For stock options issued, the fair value of each stock option was estimated on the date of grant using a binomial option pricing model. The binomial model considers a range of assumptions related to volatility, risk-free interest rate and employee exercise behavior. Expected volatilities utilized in the binomial model are based on a combination of implied market volatilities, historical volatility of the Company’s stock price and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock option grants is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding.
The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30, 2015, 2014 and 2013:
 
 
Fiscal Year Ended 
 June 30, 2015
 
Fiscal Year Ended 
 June 30, 2014
 
Fiscal Year Ended 
 June 30, 2013
Graded Vesting
 
 
 
 
 
 
Risk-free interest rate
 
1.8
%
 
2.1
%
 
1.3
%
Dividend yield
 
2.1
%
 
2.3
%
 
3.2
%
Weighted-average volatility factor
 
24.2
%
 
26.4
%
 
25.7
%
Weighted-average expected life (in years)
 
6.9

 
6.9

 
6.8

Weighted-average fair value (in dollars)
 
$10.21
 
$8.19
 
$3.78

 
 
Fiscal Year Ended 
 June 30, 2015
 
Fiscal Year Ended 
 June 30, 2014
 
Fiscal Year Ended 
 June 30, 2013
Cliff Vesting
 
 
 
 
 
 
Risk-free interest rate
 
—

 
2.3
%
 
—

Dividend yield
 
—

 
2.3
%
 
—

Weighted-average volatility factor
 
—

 
26.4
%
 
—

Weighted-average expected life (in years)
 
—

 
7.7

 
—

Weighted-average fair value (in dollars)
 
—

 
$8.76
 
—