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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2016
STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION | NOTE 15 STOCK‑BASED COMPENSATION The Company issues stock options and restricted stock units to employees under Stock Awards Plans approved by stockholders. Restricted stock units are issued to non‑employee directors under the Director Restricted Stock Unit Plan and the 2016 Equity Incentive Plan, and stock options were formerly issued to non-employee directors under the Director Stock Option Plan, each approved by stockholders. Options are awarded with the exercise price equal to the market price on the date of grant and generally become exercisable over three years and expire 10 years after grant. Restricted stock units granted to employees generally vest over three years. Compensation expense recorded attributable to stock options for the year ended December 31, 2016 was approximately $16.9 million ($11.3 million after tax). The income tax benefit related to this compensation expense was approximately $5.6 million. Approximately $15.0 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2015 was approximately $17.9 million ($11.6 million after tax). The income tax benefit related to this compensation expense was approximately $6.3 million. Approximately $15.7 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2014 was approximately $18.0 million ($11.7 million after tax). The income tax benefit related to this compensation expense was approximately $6.3 million. Approximately $16.0 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. The Company uses historical data to estimate expected life and volatility. The weighted‑average fair value of stock options granted under the Stock Awards Plans was $10.59, $12.83 and $14.82 per share in 2016, 2015 and 2014, respectively. These values were estimated on the respective dates of grant using the Black‑Scholes option‑pricing model with the following weighted‑average assumptions:
Stock Awards Plans: |  |  |  |  |  |  |
Years Ended December 31, |  | 2016 |  | 2015 |  | 2014 |
Dividend Yield |  | 1.8 | % | 1.7 | % | 1.7 | %
Expected Stock Price Volatility |  | 16.9 | % | 21.9 | % | 22.2 | %
Risk-free Interest Rate |  | 1.6 | % | 1.6 | % | 2.3 | %
Expected Life of Option (years) |  | 6.7 |  | 6.9 |  | 6.9 |
There were no grants under the Director Stock Option Plan during 2016 or 2015 as this plan was cancelled and replaced by the Director Restricted Stock Unit Plan. The fair value of stock options granted under the Director Stock Option Plan was $14.07 per share in 2014. This value was estimated on the date of the grant using the Black‑Scholes option‑pricing model with the following weighted‑average assumptions:
Director Stock Option Plans: |  |  |
Year Ended December 31, |  | 2014 |
Dividend Yield |  | 1.8 | %
Expected Stock Price Volatility |  | 22.2 | %
Risk-free Interest Rate |  | 2.2 | %
Expected Life of Option (years) |  | 6.9 |
A summary of option activity under the Company’s stock option plans as of December 31, 2016, and changes during the period then ended is presented below:
|  | Stock Awards Plans |  | Director Stock Option Plans |
|  |  |  |  | Weighted Average |  |  |  | Weighted Average |
|  |  | Options |  | Exercise Price |  | Options |  | Exercise Price |
Outstanding, January 1, 2016 |  |  | 8,032,030 |  | $ | 51.44 |  | 303,501 |  | $ | 56.00 |
Granted |  |  | 1,481,180 |  |  | 71.17 |  | — |  |  | — |
Exercised |  |  | (1,304,374) |  |  | 42.20 |  | (22,167) |  |  | 50.37 |
Forfeited or expired |  |  | (138,392) |  |  | 62.49 |  | — |  |  | — |
Outstanding at December 31, 2016 |  |  | 8,070,444 |  | $ | 56.36 |  | 281,334 |  | $ | 56.45 |
Exercisable at December 31, 2016 |  |  | 5,317,690 |  | $ | 50.06 |  | 255,998 |  | $ | 55.44 |
Weighted-Average Remaining Contractual Term (Years): |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2016 |  |  | 6.1 |  |  |  |  | 5.9 |  |  |  |
Exercisable at December 31, 2016 |  |  | 4.9 |  |  |  |  | 5.7 |  |  |  |
Aggregate Intrinsic Value: |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2016 |  | $ | 137,933 |  |  |  | $ | 4,783 |  |  |  |
Exercisable at December 31, 2016 |  | $ | 124,425 |  |  |  | $ | 4,610 |  |  |  |
Intrinsic Value of Options Exercised During the Years Ended: |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2016 |  | $ | 44,972 |  |  |  | $ | 548 |  |  |  |
December 31, 2015 |  | $ | 43,041 |  |  |  | $ | 1,478 |  |  |  |
December 31, 2014 |  | $ | 33,059 |  |  |  | $ | 741 |  |  |  |
The grant date fair value of options vested during the years ended December 31, 2016, 2015 and 2014 was $17.2 million, $16.1 million and $14.1 million, respectively. Cash received from option exercises was approximately $53.5 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $13.6 million in the year ended December 31, 2016. As of December 31, 2016, the remaining valuation of stock option awards to be expensed in future periods was $12.1 million and the related weighted‑average period over which it is expected to be recognized is 1.4 years. The fair value of restricted stock unit grants is the market price of the underlying shares on the grant date. A summary of restricted stock unit activity as of December 31, 2016, and changes during the period then ended is presented below:
|  |  |  |  |  |  | Director Restricted |
|  | Stock Awards Plans |  | Stock Unit Plan |
|  |  |  | Weighted Average |  |  |  | Weighted Average |
|  | RSUs |  | Grant-Date Fair Value |  | RSUs |  | Grant-Date Fair Value |
Nonvested at January 1, 2016 |  | 66,376 |  | $ | 66.61 |  | 18,857 |  | $ | 63.10 |
Granted |  | 21,754 |  |  | 73.45 |  | 15,745 |  |  | 75.56 |
Vested |  | (11,371) |  |  | 61.96 |  | (18,857) |  |  | 63.10 |
Forfeited |  | (4,632) |  |  | 68.00 |  | — |  |  | — |
Nonvested at December 31, 2016 |  | 72,127 |  | $ | 69.31 |  | 15,745 |  | $ | 75.56 |
Compensation expense recorded attributable to restricted stock unit grants for the years ended December 31, 2016, 2015 and 2014 was approximately $3.0 million, $2.7 million and $1.8 million, respectively. The fair value of units vested during the years ended December 31, 2016, 2015 and 2014 was $1.9 million, $757 thousand and $614 thousand, respectively. The intrinsic value of units vested during the years ended December 31, 2016, 2015 and 2014 was $2.3 million, $877 thousand and $761 thousand, respectively. As of December 31, 2016, there was $1.1 million of total unrecognized compensation cost relating to restricted stock unit awards which is expected to be recognized over a weighted average period of 1.2 years. During the first quarter of 2014, the Company approved a new long-term incentive program for certain employees. Each award is based on the cumulative total stockholder return of our common stock during a three year performance period. Total expense related to this program is expected to be approximately $1.0 million over the performance period. For the year ended December 31, 2016, we recognized income of $1.0 million, while for the years ended December 31, 2015 and 2014, we recognized expense of $1.2 million and $530 thousand, respectively.

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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=65895303&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=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: 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 5: 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 6: 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 + Details
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