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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock incentive plans | STOCK-BASED COMPENSATION The Company has granted restricted common stock and restricted stock units (collectively, "restricted stock") and performance share units as long-term incentive awards to employees and non-employee directors under the BorgWarner Inc. 2014 Stock Incentive Plan, as amended ("2014 Plan") and the BorgWarner Inc. 2018 Stock Incentive Plan ("2018 Plan"). The Company's Board of Directors adopted the 2018 Plan as a replacement to the 2014 Plan in February 2018, and the Company's stockholders approved the 2018 Plan at the annual meeting of stockholders on April 25, 2018. After stockholders approved the 2018 Plan, the Company could no longer make grants under the 2014 Plan. The shares that were available for issuance under the 2014 Plan were cancelled upon approval of the 2018 Plan. The 2018 Plan authorizes the issuance of a total of 7 million shares, of which approximately 6.9 million shares were available for future issuance as of December 31, 2018. Stock Options A summary of the plans’ shares under option at December 31, 2018, 2017 and 2016 is as follows:
| Shares (thousands) |  | Weighted average exercise price |  | Weighted average remaining contractual life (in years) |  | Aggregate intrinsic value (in millions)
Outstanding at January 1, 2016 | 1,267 |  |  | $ | 16.59 |  |  | 0.9 |  | $ | 33.7 |
Exercised | (794 | ) |  | $ | 16.07 |  |  |  |  | $ | 14.4 |
Outstanding at December 31, 2016 | 473 |  |  | $ | 17.47 |  |  | 0.1 |  | $ | 10.4 |
Exercised | (473 | ) |  | $ | 17.47 |  |  |  |  | $ | 10.4 |
Outstanding at December 31, 2017 | — |  |  | $ | — |  |  | 0.0 |  | $ | — |
Exercised | — |  |  | $ | — |  |  |  |  | $ | — |
Outstanding at December 31, 2018 | — |  |  | $ | — |  |  | 0.0 |  | $ | — |
Options exercisable at December 31, 2018 | — |  |  | $ | — |  |  | 0.0 |  | $ | — |
Proceeds from stock option exercises for the years ended December 31, 2018, 2017 and 2016 were as follows:
| Year Ended December 31,
(millions of dollars) | 2018 |  | 2017 |  | 2016
Proceeds from stock options exercised — gross | $ | — |  |  | $ | 8.3 |  |  | $ | 12.7 |
Tax benefit | — |  |  | 8.2 |  |  | 0.3 |
Proceeds from stock options exercised, net of tax | $ | — |  |  | $ | 16.5 |  |  | $ | 13.0 |
Restricted Stock The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2018, restricted stock in the amount of 717,833 shares and 19,656 shares was granted to employees and non-employee directors, respectively. The value of the awards is recognized as compensation expense ratably over the restriction periods. As of December 31, 2018, there was $29.3 million of unrecognized compensation expense that will be recognized over a weighted average period of approximately 2 years. Restricted stock compensation expense recorded in the Consolidated Statements of Operations is as follows:
| Year Ended December 31,
(millions of dollars, except per share data) | 2018 |  | 2017 |  | 2016
Restricted stock compensation expense | $ | 25.9 |  |  | $ | 27.0 |  |  | $ | 26.7 |
Restricted stock compensation expense, net of tax | $ | 19.7 |  |  | $ | 19.7 |  |  | $ | 19.5 |
A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors at December 31, 2018, 2017 and 2016 is as follows:
| Shares subject to restriction (thousands) |  | Weighted average grant date fair value
Nonvested at January 1, 2016 | 1,326 |  |  | $ | 53.18 |
Granted | 724 |  |  | $ | 30.07 |
Vested | (551 | ) |  | $ | 47.55 |
Forfeited | (70 | ) |  | $ | 43.05 |
Nonvested at December 31, 2016 | 1,429 |  |  | $ | 44.12 |
Granted | 804 |  |  | $ | 40.10 |
Vested | (521 | ) |  | $ | 56.53 |
Forfeited | (119 | ) |  | $ | 38.97 |
Nonvested at December 31, 2017 | 1,593 |  |  | $ | 38.86 |
Granted | 737 |  |  | $ | 51.70 |
Vested | (556 | ) |  | $ | 42.25 |
Forfeited | (258 | ) |  | $ | 44.51 |
Nonvested at December 31, 2018 | 1,516 |  |  | $ | 42.97 |
Total Shareholder Return Performance Share Units The 2014 and 2018 Plans provide for awarding of performance shares to members of senior management at the end of successive three-year periods based on the Company's performance in terms of total shareholder return relative to a peer group of automotive companies. Based on the Company’s relative ranking within the performance peer group, it is possible for none of the awards to vest or for a range up to the 200% of the target shares to vest. The Company recognizes compensation expense relating to its performance share plans ratably over the performance period regardless of whether the market conditions are expected to be achieved. Compensation expense associated with the performance share plans is calculated using a lattice model (Monte Carlo simulation). The amounts expensed under the plan and the common stock issuances for the three-year measurement periods ended December 31, 2018, 2017 and 2016 were as follows:
| Year Ended December 31,
(millions of dollars, except share data) | 2018 |  | 2017 |  | 2016
Expense | $ | 9.0 |  |  | $ | 9.9 |  |  | $ | 9.6 |
Number of shares | — |  |  | — |  |  | — |
A summary of the status of the Company's nonvested total shareholder return performance share units at December 31, 2018, 2017 and 2016 is as follows:
| Number of shares (thousands) |  | Weighted average grant date fair value
Nonvested at January 1, 2016 | 475 |  |  | $ | 56.55 |
Granted | 171 |  |  | $ | 16.61 |
Forfeited | (236 | ) |  | $ | 49.37 |
Nonvested at December 31, 2016 | 410 |  |  | $ | 43.99 |
Granted | 201 |  |  | $ | 45.57 |
Forfeited | (256 | ) |  | $ | 61.40 |
Nonvested at December 31, 2017 | 355 |  |  | $ | 32.35 |
Granted | 287 |  |  | $ | 68.38 |
Forfeited | (345 | ) |  | $ | 38.26 |
Nonvested at December 31, 2018 | 297 |  |  | $ | 60.35 |
As of December 31, 2018, there was $7.5 million of unrecognized compensation expense that will be recognized over a weighted average period of approximately 1.4 years. Relative Revenue Growth Performance Share Units In the second quarter of 2016, the Company started a new performance share program to reward members of senior management based on the Company's performance in terms of revenue growth relative to the vehicle market over three-year performance periods. The value of this performance share award is determined by the market value of the Company’s common stock at the date of grant. The Company recognizes compensation expense relating to its performance share plans over the performance period based on the number of shares expected to vest at the end of each reporting period. The actual performance of the Company is evaluated quarterly, and the expense is adjusted according to the new projections. The amounts expensed under the plan and common stock issuance for the year ended December 31, 2018, 2017 and 2016 were as follows:
| Year Ended December 31,
(millions of dollars, except share data) | 2018 |  | 2017 |  | 2016
Expense | $ | 18.0 |  |  | $ | 15.9 |  |  | $ | 7.1 |
Number of shares | 249,000 |  |  | 126,000 |  |  | — |
A summary of the status of the Company’s nonvested relative revenue growth performance shares at December 31, 2018, 2017 and 2016 is as follows:
| Number of shares (thousands) |  | Weighted average grant date fair value
Nonvested at January 1, 2016 | — |  |  | $ | — |
Granted | 485 |  |  | $ | 38.62 |
Vested | (126 | ) |  | $ | 38.62 |
Forfeited | (39 | ) |  | $ | 38.62 |
Nonvested at December 31, 2016 | 320 |  |  | $ | 38.62 |
Granted | 198 |  |  | $ | 40.08 |
Vested | (156 | ) |  | $ | 38.62 |
Forfeited | (7 | ) |  | $ | 39.20 |
Nonvested at December 31, 2017 | 355 |  |  | $ | 39.42 |
Granted | 287 |  |  | $ | 50.82 |
Vested | (166 | ) |  | $ | 38.62 |
Forfeited | (179 | ) |  | $ | 45.82 |
Nonvested at December 31, 2018 | 297 |  |  | $ | 47.03 |
Based on the Company’s relative revenue growth in excess of the industry vehicle production, it is possible for none of the awards to vest or for a range up to the 200% of the target shares to vest. As of December 31, 2018, there was $8.6 million of unrecognized compensation expense that will be recognized over a weighted average period of approximately 1.4 years. The unrecognized amount of compensation expense is based on projected performance as of December 31, 2018. In 2018, the Company modified the vesting provisions of restricted stock and performance share unit grants made to retiring executive officers to allow certain of the outstanding awards, that otherwise would have been forfeited, to vest upon retirement. This resulted in net restricted stock and performance share unit compensation expense of $8.3 million in the year ended December 31, 2018. Additional incremental compensation expense of $4.0 million related to these modified awards will be recognized ratably through February 2019.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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