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Stockholders' Equity
 12 Months Ended
Dec. 31, 2013
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity
Preferred Stock
Authorized preferred stock may be issued in one or more series, with designations, powers and preferences as shall be designated by the Board of Directors. At December 31, 2013, there were no shares of preferred stock issued.
Share-based Compensation
The Company sponsors three principal share-based incentive compensation programs. During 2007, the Company adopted the Allegheny Technologies Incorporated 2007 Incentive Plan (the “Incentive Plan”), which was amended and restated in 2010 and further amended in 2012. Awards earned under share-based incentive compensation programs are generally paid with shares held in treasury, if sufficient treasury shares are held, and any additional required share payments are made with newly issued shares. At December 31, 2013, approximately 2.3 million shares of common stock were available for future awards under the Incentive Plan. The general terms of each arrangement granted under the Incentive Plan, and predecessor plans, the method of estimating fair value for each arrangement, and award activity is reported below.
Stock option awards: The Company ceased granting stock options to employees in 2003 and to non-employee directors in 2006. As of December 31, 2013, there were no unvested stock option awards.
Stock option transactions under the Company’s plans for the years ended December 31, 2013, 2012, and 2011 are summarized as follows:
 
 
2013
 
2012
 
2011
(shares in thousands)
 
Number of
shares
 
Weighted
Average
Exercise Price
 
Number of
shares
 
Weighted
Average
Exercise Price
 
Number of
shares
 
Weighted
Average
Exercise Price
Outstanding, beginning of year
 
107

 
$
9.33

 
427

 
$
7.51

 
600

 
$
8.11

Granted
 
—

 
—

 
—

 
—

 
—

 
—

Exercised
 
(91
)
 
4.03

 
(319
)
 
6.89

 
(171
)
 
9.53

Cancelled
 
(1
)
 
3.90

 
(1
)
 
9.66

 
(2
)
 
16.52

Outstanding at end of year
 
15

 
$
42.21

 
107

 
$
9.33

 
427

 
$
7.51

Exercisable at end of year
 
15

 
$
42.21

 
107

 
$
9.33

 
427

 
$
7.51


The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2013 was $0.2 million and the average remaining contractual life of those options was 1.5 years. The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the fourth quarter of fiscal 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2013.
Nonvested stock awards: Awards of nonvested stock are granted to employees, with either performance and/or service conditions. Awards of nonvested stock are also granted to non-employee directors, with service conditions. For nonvested stock awarded in 2008, nonvested shares participated in cash dividends during the restricted period. For nonvested stock awarded in 2013, 2012 and 2011, dividend equivalents, whether in stock or cash form, accumulate but are not paid until the underlying award vests.
The fair value of nonvested stock awards is measured based on the stock price at the grant date, adjusted for non-participating dividends, as applicable, based on the current dividend rate. For nonvested stock awards to employees in 2013, 2012, and 2011, under the Company’s Performance/Restricted Stock Program (PRSP), one-half of the nonvested stock (“performance shares”) vests only on the attainment of an income target, measured over a cumulative three-year period. The remaining nonvested stock awarded to employees vests over a service period of five years, with accelerated vesting to three years if the performance shares’ vesting criterion is attained. Expense for each of these awards is recognized based on estimates of attaining the performance criterion, including estimated forfeitures. As of December 31, 2013, the income statement metric for the 2013 PRSP nonvested stock award was not expected to be attained for the performance shares, therefore, no expense was recognized on the performance shares and expense for the remaining nonvested stock was recognized on a straight line basis based on a five-year vesting assumption. As of December 31, 2013, the income statement metric for the 2012 PRSP nonvested stock award was expected to be attained for the performance shares, and expense for both portions of the award was recognized on a straight line basis based on a three-year vesting assumption. The income statement metric for the 2011 PRSP nonvested stock award comprising 250,347 shares was met as of December 31, 2013. In February 2013, the five-year service portion of 2008 PRSP nonvested stock award was met, and 66,522 shares vested.
Compensation expense in continuing operations related to all nonvested stock awards was $11.3 million in 2013, $14.0 million in 2012, and $19.7 million in 2011. In 2013 and 2011, the retirements of certain senior executives resulted in the accelerated recognition of $1.5 million and $3.4 million, respectively, of nonvested stock compensation expense. The underlying shares for awards to employees who meet the retirement criteria retain their restrictions for performance or service vesting conditions for the award periods until it is determined whether such conditions are met. Approximately $10.5 million of unrecognized fair value compensation expense relating to nonvested stock awards is expected to be recognized through 2018 based on estimates of attaining performance vesting criteria, including estimated forfeitures. Activity under the Company’s nonvested stock awards for the years ended December 31, 2013, 2012 and 2011 was as follows:
(Shares in thousands, $ in millions)
 
2013
 
2012
 
2011
 
 
Number of
shares
 
Weighted
Average
Grant Date
Fair Value
 
Number of
shares
 
Weighted
Average Grant
Date Fair
Value
 
Number of
shares
 
Weighted
Average Grant
Date Fair
Value
Nonvested, beginning of year
 
727

 
$
38.6

 
677

 
$
36.4

 
976

 
$
33.3

Granted
 
576

 
16.4

 
394

 
16.4

 
319

 
19.5

Vested
 
(333
)
 
(16.4
)
 
(343
)
 
(14.1
)
 
(616
)
 
(16.3
)
Forfeited
 
(43
)
 
(1.7
)
 
(1
)
 
(0.1
)
 
(2
)
 
(0.1
)
Nonvested, end of year
 
927

 
$
36.9

 
727

 
$
38.6

 
677

 
$
36.4


Total shareholder return incentive compensation program (“TSRP”) awards: Award opportunities under the TSRP are determined at a target number of shares, and awards pay out based on the measured return of the Company’s stock price and dividend performance at the end of three-year periods as compared to the stock price and dividend performance of a group of industry peers. In 2013, the Company established a 2013-2015 TSRP, with 381,324 shares as the target award level. The actual number of shares awarded at the end of the performance measurement period may range from a minimum of zero to a maximum of two times target for the 2013-2015 and 2012-2014 awards, and to a maximum of three times target for the 2011-2013 award. Fair values for the TSRP awards were estimated using Monte Carlo simulations of stock price correlation, projected dividend yields and other variables over three-year time horizons matching the TSRP performance measurement periods. Compensation expense from continuing operations was $12.3 million in 2013, $19.2 million in 2012, and $24.2 million in 2011 for the fair value of TSRP awards. The above amounts include recognition of $1.5 million in compensation expense for 2012 and $5.0 million in compensation expense for 2011, associated with certain former senior executives who retained full participation in the shares awarded to them for the performance measurement period of the 2010-2012 TSRP award due to continuing consulting arrangements with the Company.
The estimated fair value of each TSRP award, the projected shares to be awarded and future compensation expense to be recognized for TSRP awards, including estimated forfeitures, was as follows:
(Shares in thousands, $ in millions)
TSRP Award Performance Period
 
TSRP Award
Fair Value
 
December 31, 2013
Unrecognized
Compensation
Expense
 
Minimum
Shares
 
Target
Shares
 
Maximum
Shares
2011 - 2013
 
$
20.1

 
$
—

 
—

 
158

 
473

2012 - 2014
 
$
8.7

 
2.9

 
—

 
184

 
368

2013 - 2015
 
$
11.4

 
7.6

 
—

 
320

 
641

Total
 
 
 
$
10.5

 
—

 
662

 
1,482


An award was earned for the 2011-2013 TSRP performance period based on the Company’s stock price and dividend performance for the three-year period ended December 31, 2013 relative to the peer group, which resulted in the issuance of 83,515 shares of stock to participants in the 2014 first quarter.
Undistributed Earnings of Investees
Stockholders’ equity includes undistributed earnings of investees accounted for under the equity method of accounting of approximately $21 million at December 31, 2013.