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Equity Incentive Plans | 3 Months Ended
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Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Equity Incentive Plans | Equity Incentive Plans In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants. RSUs RSUs vest over periods of up to five years. RSUs may contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date. During the three months ended March 31, 2014, our Board of Directors granted 592,001 RSUs to employees. The fair value of RSUs that vested during the three months ended March 31, 2014 was approximately $15.6 million. Stock Options Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either 6 or 10 years from the date they are granted. During the three months ended March 31, 2014, our Board of Directors granted 126,755 stock options to employees. The grant date fair value of these options was immaterial to the financial statements. Restricted Stock Restricted stock vests over a five year period, subject to a continued service condition. Shares of restricted stock may not be sold, pledged or otherwise transferred until they vest. A summary of transactions in our stock-based compensation plans is as follows:
| Shares Available For Grant |  | RSUs |  | Stock Options |  | Restricted Stock
Number Outstanding |  | Weighted Average Grant Date Fair Value |  | Number Outstanding |  | Weighted Average Exercise Price |  | Number Outstanding |  | Weighted Average Grant Date Fair Value
Balance, January 1, 2014 | 13,965,440 |  |  | 2,558,213 |  |  | $ | 16.63 |  |  | 6,832,331 |  |  | $ | 7.04 |  |  | 20,000 |  |  | $ | 9.30 |
Granted | (718,756 | ) |  | 592,001 |  |  | 32.31 |  |  | 126,755 |  |  | 32.31 |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |  |  | (482,844 | ) |  | 4.92 |  |  | — |  |  | — |
Vested | — |  |  | (523,269 | ) |  | 16.11 |  |  | — |  |  | — |  |  | — |  |  | — |
Canceled | 60,326 |  |  | (28,526 | ) |  | 17.61 |  |  | (31,800 | ) |  | 7.56 |  |  | — |  |  | — |
Balance, March 31, 2014 | 13,307,010 |  |  | 2,598,419 |  |  | $ | 20.29 |  |  | 6,444,442 |  |  | $ | 7.69 |  |  | 20,000 |  |  | $ | 9.30 |
For the 2014 RSU grants that contain both a performance-based vesting condition and a time-based vesting condition, we recognize compensation expense under the accelerated attribution method, pursuant to which expense is recognized over the requisite service period for each separate vesting tranche of the award. During the three months ended March 31, 2014 and 2013, we recognized $2.6 million and $1.4 million of stock based compensation expense, respectively, related to the RSUs containing a performance-based vesting condition. For all other awards, which are subject to only a time-based vesting condition, we recognize compensation expense on a straight-line basis over the requisite service period of the entire award. In all cases, compensation expense is adjusted to reflect estimated forfeitures. When estimating forfeitures, we consider voluntary and involuntary termination behavior as well as analysis of historical forfeitures. The components of pre-tax stock-based compensation expense are as follows (in thousands):
| Three Months Ended
| March 31,
| 2014 |  | 2013
RSUs | $ | 5,396 |  |  | $ | 3,672 |
Stock options | 804 |  |  | 1,209 |
Restricted stock | 46 |  |  | 68 |
Total stock-based compensation expense | $ | 6,246 |  |  | $ | 4,949 |
The following table sets forth the classification of total stock-based compensation expense included in our Unaudited Condensed Consolidated Statements of Income (in thousands):
| Three Months Ended
| March 31,
| 2014 |  | 2013
Cost of goods sold | $ | 103 |  |  | $ | 98 |
Facility and warehouse expenses | 579 |  |  | 684 |
Selling, general and administrative expenses | 5,564 |  |  | 4,167 |
| 6,246 |  |  | 4,949 |
Income tax benefit | (2,405 | ) |  | (1,930 | )
Total stock-based compensation expense, net of tax | $ | 3,841 |  |  | $ | 3,019 |
We have not capitalized any stock-based compensation costs during either of the three month periods ended March 31, 2014 or 2013. As of March 31, 2014, unrecognized compensation expense related to unvested RSUs, stock options and restricted stock is expected to be recognized as follows (in thousands):
| RSUs |  | Stock Options |  | Restricted Stock |  | Total
Remainder of 2014 | $ | 12,989 |  |  | $ | 2,171 |  |  | $ | 93 |  |  | $ | 15,253 |
2015 | 13,188 |  |  | 398 |  |  | — |  |  | 13,586 |
2016 | 8,323 |  |  | 331 |  |  | — |  |  | 8,654 |
2017 | 4,800 |  |  | 9 |  |  | — |  |  | 4,809 |
2018 | 2,334 |  |  | — |  |  | — |  |  | 2,334 |
2019 | 101 |  |  |  |  |  |  | 101 |
Total unrecognized compensation expense | $ | 41,735 |  |  | $ | 2,909 |  |  | $ | 93 |  |  | $ | 44,737 |

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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 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: 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 3: 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=6406099&loc=d3e25284-112666 Reference 4: 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=6418621&loc=d3e17540-113929 Reference 5: 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 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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