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Stock-Based Compensation
 6 Months Ended
Jun. 29, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

Note 12 – Stock-Based Compensation

 

Our accompanying unaudited consolidated statements of income reflect share-based pre-tax compensation expense of $11.4 million ($7.8 million after-tax) and $16.7 million ($11.4 million after-tax) for the three and six months ended June 29, 2013, respectively, and $11.2 million ($7.8 million after-tax) and $20.0 million ($13.7 million after-tax) for the three and six months ended June 30, 2012, respectively.

 

Stock-based compensation represents the cost related to stock-based awards granted to employees and non-employee directors. We measure stock-based compensation at the grant date, based on the estimated fair value of the award, and recognize the cost (net of estimated forfeitures) as compensation expense on a straight-line basis over the requisite service period. Our stock-based compensation expense is reflected in selling, general and administrative expenses in our consolidated statements of income.

 

Stock-based awards are provided to certain employees and non-employee directors under the terms of our 2013 Stock Incentive Plan, as amended, and our 1996 Non-Employee Director Stock Incentive Plan, as amended (together, the “Plans”). The Plans are administered by the Compensation Committee of the Board of Directors. Prior to March 2009, awards under the Plans principally included a combination of at-the-money stock options and restricted stock (including restricted stock units). Since March 2009, equity-based awards have been granted solely in the form of restricted stock and restricted stock units, with the exception of stock options for certain pre-existing contractual obligations.

 

Grants of restricted stock are common stock awards granted to recipients with specified vesting provisions. We issue restricted stock that vests solely based on the recipient's continued service over time (primarily four-year cliff vesting) and restricted stock that vests based on our achieving specified performance measurements and the recipient's continued service over time (primarily three-year cliff vesting).

 

With respect to time-based restricted stock, we estimate the fair value on the date of grant based on our closing stock price. With respect to performance-based restricted stock, the number of shares that ultimately vest and are received by the recipient is based upon our performance as measured against specified targets over a three-year period as determined by the Compensation Committee of the Board of Directors. Although there is no guarantee that performance targets will be achieved, we estimate the fair value of performance-based restricted stock based on our closing stock price at time of grant.

 

The Plans provide for adjustments to the performance-based restricted stock targets for significant events such as acquisitions, divestitures, new business ventures and share repurchases. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted upward or downward based upon our estimation of achieving such performance targets. The ultimate number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on our actual performance metrics as defined under the Plans.

 

Restricted stock units are awards that we grant to certain employees that entitle the recipient to shares of common stock upon vesting. We grant restricted stock units with the same time-based and performance-based vesting that we use for restricted stock. The fair value of restricted stock units is determined on the date of grant, based on our closing stock price.

 

Total unrecognized compensation cost related to non-vested awards as of June 29, 2013 was $98.6 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years.

The following table summarizes stock option activity under the Plans during the six months ended June 29, 2013:

       Weighted    
       Average    
    Weighted  Remaining    
    Average  Contractual  Aggregate
    Exercise Life in   Intrinsic
  Shares Price Years  Value
Outstanding at beginning of period  2,138 $ 48.61     
Granted  -   -     
Exercised  (469)   41.81     
Forfeited  -   -     
Outstanding at end of period  1,669 $ 50.52  3.3 $75,451
           
Options exercisable at end of period  1,669 $ 50.52  3.3 $75,451

The following tables summarize the activity of our non-vested restricted stock/units for the six months ended June 29, 2013:

  Time-Based Restricted Stock/Units
    Weighted Average    
    Grant Date Fair  Intrinsic Value
  Shares/Units Value Per Share  Per Share
Outstanding at beginning of period  1,018 $56.87    
Granted  210  86.17    
Vested  (277)  35.43    
Forfeited  (21)  68.64    
Outstanding at end of period  930 $69.62  $95.74
          
          
  Performance-Based Restricted Stock/Units
    Weighted Average    
    Grant Date Fair  Intrinsic Value
  Shares/Units Value Per Share  Per Share
Outstanding at beginning of period  1,315 $53.27    
Granted  269  83.28    
Vested  (362)  56.55    
Forfeited  (17)  73.26    
Outstanding at end of period  1,205 $61.53  $95.74