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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-Based Compensation | Note 12 — Stock-Based Compensation The following table details the stock-based compensation expense by type of award for the years ended December 31, 2018, 2017 and 2016:
(In millions, except per share data) |  | 2018 |  |  | 2017 |  |  | 2016 |
Non-qualified stock options |  | $ | 3.6 |  |  | $ | 4.0 |  |  | $ | 3.6 |
Restricted stock, service based (“RSUs”) |  | 6.1 |  |  | 6.4 |  |  | 5.8 |
Restricted stock, performance based (“PRSUs”) |  | 5.8 |  |  | 6.7 |  |  | 6.3 |
Employee stock purchase plan |  | 0.5 |  |  | 0.4 |  |  | 0.4 |
Stock-based compensation expense |  | $ | 16.0 |  |  | $ | 17.5 |  |  | $ | 16.1 |
Tax benefit from stock exercised and converted during the period |  | $ | 7.8 |  |  | $ | 7.6 |  |  | $ | 2.8 |
Non-Qualified Stock Options Non-qualified stock options (“NQOs”) have been granted to our employees and directors under our stock compensation plan. Options granted generally vest over three years and expire ten years from the date of grant. A summary of option activity under the plan for the three years ended December 31, 2018 is as follows:
|  | Number of |  |  | Weighted- |  |  | Weighted- average Remaining |
|  | Options |  |  | Average |  |  | Contractual Life |
|  | (In millions) |  |  | Exercise Price |  |  | (in years) |
Outstanding at December 31, 2015 |  |  | 2.3 |  |  | $ | 23.75 |  |  |  | 5.39 |
Options granted |  |  | 0.3 |  |  | $ | 41.71 |  |  | — |
Options exercised |  |  | (0.3 | ) |  | $ | 20.17 |  |  | — |
Outstanding at December 31, 2016 |  |  | 2.3 |  |  | $ | 26.08 |  |  |  | 5.20 |
Options granted |  |  | 0.2 |  |  | $ | 50.50 |  |  | — |
Options exercised |  |  | (0.8 | ) |  | $ | 22.34 |  |  |  |  |
Outstanding at December 31, 2017 |  |  | 1.7 |  |  | $ | 31.18 |  |  |  | 5.19 |
Options granted |  |  | 0.2 |  |  | $ | 68.15 |  |  | — |
Options exercised |  |  | (0.4 | ) |  | $ | 16.06 |  |  | — |
Outstanding at December 31, 2018 |  |  | 1.5 |  |  | $ | 38.97 |  |  |  | 5.20 |
|  | Year Ended December 31, |
(In millions, except weighted average exercise price) |  | 2018 |  |  | 2017 |
Aggregate intrinsic value of outstanding options |  | $ | 29.1 |  |  | $ | 53.1 |
Aggregate intrinsic value of exercisable options |  | $ | 26.8 |  |  | $ | 45.8 |
Total intrinsic value of options exercised |  | $ | 19.1 |  |  | $ | 25.6 |
Total number of options exercisable |  |  | 1.1 |  |  |  | 1.3 |
Weighted average exercise price of options exercisable |  | $ | 32.86 |  |  | $ | 25.27 |
Total unrecognized compensation cost on nonvested options (a) |  | $ | 1.3 |  |  | $ | 1.2 |
(a) | Unrecognized compensation cost relates to nonvested stock options and is expected to be recognized over the remaining vesting period ranging from one year to three years.
Valuation Assumptions in Estimating Fair Value We estimated the fair value of stock options at the grant date using the Black-Scholes option pricing model with the following assumptions for the years ended December 31, 2018, 2017 and 2016:
|  | 2018 |  |  | 2017 |  |  | 2016 |
Risk-free interest rate |  |  | 2.53 | % |  |  | 2.41 | % |  |  | 1.62 | %
Expected option life (in years) |  |  | 5.95 |  |  | 5.95 |  |  | 5.95 |
Dividend yield |  |  | 0.7 | % |  |  | 0.9 | % |  |  | 1.0 | %
Volatility |  |  | 35.64 | % |  |  | 34.74 | % |  |  | 38.41 | %
Weighted-average fair value per option granted |  | $ | 24.36 |  |  | $ | 16.93 |  |  | $ | 14.65 |
The weighted-average expected life is derived from the average midpoint between the vesting and the contractual term and considers the effect of both the inclusion and exclusion of post-vesting cancellations during the ten-year period. Expected volatility is calculated based on a blend of both historic volatility of our common stock and implied volatility of our traded options. We weigh both volatility inputs equally and utilize the average as the volatility input for the Black-Scholes calculation. The risk-free interest rate for the expected term is based on the U.S. Treasury yield curve in effect at the time of grant and corresponding to the expected term. Restricted Stock Units — Service Based As of December 31, 2018, a total of 452,176 shares of service based restricted stock (“RSUs”) were outstanding, which vest based on years of service under the 2003 and 2013 incentive stock plans. RSUs are granted to key employees, executives and directors of the Company. The fair value of the RSU is based on the closing market price of the Company’s common stock on the date of grant and is amortized on a straight line basis over the requisite service period. The stock-based compensation expense recognized is based on an estimate of shares ultimately expected to vest, and therefore it has been reduced for estimated forfeitures. The total compensation expense related to awards granted to retirement-eligible employees is recognized on the grant date. The table presented below provides a summary of the Company’s RSU activity for the years ended December 31, 2018, 2017 and 2016:
|  |  |  |  |  | Weighted- |
|  | RSUs |  |  | Average |
|  | Number of (In millions) |  |  | Fair Value Grant Date |
Outstanding at December 31, 2015 |  |  | 0.5 |  |  | $ | 31.73 |
RSUs granted |  |  | 0.1 |  |  | $ | 42.05 |
RSUs issued |  |  | (0.1 | ) |  | $ | 37.01 |
Outstanding at December 31, 2016 |  |  | 0.5 |  |  | $ | 33.72 |
RSUs granted |  |  | 0.1 |  |  | $ | 50.97 |
RSUs issued |  |  | (0.1 | ) |  | $ | 38.17 |
Outstanding at December 31, 2017 |  |  | 0.5 |  |  | $ | 36.75 |
RSUs granted |  |  | 0.1 |  |  | $ | 66.63 |
RSUs issued |  |  | (0.1 | ) |  | $ | 41.46 |
Outstanding at December 31, 2018 |  |  | 0.5 |  |  | $ | 41.65 |
As of December 31, 2018, there was total unrecognized compensation cost related to nonvested RSUs of $4.7 million, which is to be recognized over the remaining vesting period ranging from one year to three years. Restricted Stock Units — Performance Based As of December 31, 2018, a total of 336,305 shares of performance based restricted stock (“PRSUs”) were outstanding under the 2003 and 2013 incentive stock plans. The total amount of PRSUs that will ultimately vest is based on the achievement of various financial performance targets set forth by the Company’s Compensation Committee on the date of grant. PRSUs are based on a three-year performance period. The stock based compensation expense related to awards granted to retirement-eligible employees is expensed on the grant date and is trued up as projections change. The fair value of the PRSU is based on the closing market price of the Company’s common stock on the date of grant and is amortized straight-line over the total three year period. A change in the performance measure expected to be achieved is recorded as an adjustment in the period in which the change occurs. The table presented below provides a summary, of the Company’s PRSU activity, at original grant amounts, for the years ended December 31, 2018, 2017 and 2016:
|  |  |  |  |  | Weighted- |
|  | Number of |  |  | Average |
|  | PRSUs |  |  | Grant Date |
|  | (In millions) |  |  | Fair Value |
Outstanding at December 31, 2015 |  |  | 0.4 |  |  | $ | 36.59 |
PRSUs granted |  |  | 0.2 |  |  | $ | 43.96 |
PRSUs additional performance shares |  |  | 0.1 |  |  | $ | 28.09 |
PRSUs issued |  |  | (0.3 | ) |  | $ | 28.15 |
Outstanding at December 31, 2016 |  |  | 0.4 |  |  | $ | 42.66 |
PRSUs granted |  |  | 0.2 |  |  | $ | 50.50 |
PRSUs issued |  |  | (0.2 | ) |  | $ | 42.57 |
Outstanding at December 31, 2017 |  |  | 0.4 |  |  | $ | 45.35 |
PRSUs granted |  |  | 0.1 |  |  | $ | 68.15 |
PRSUs issued |  |  | (0.2 | ) |  | $ | 43.96 |
Outstanding at December 31, 2018 |  |  | 0.3 |  |  | $ | 51.75 |
As of December 31, 2018, there was total unrecognized compensation cost related to nonvested PRSUs of $2.0 million, which is to be recognized over the remaining vesting period ranging from one year to three years. The final amount of compensation cost to be recognized is dependent upon our financial performance. Stock-Based Compensation Cash Activity During 2018, cash received from stock option exercises was $5.1 million. We used $5.9 million in cash related to the shares withheld to satisfy employee tax obligations for RSUs and PRSUs converted during the year ended December 31, 2018. We classify the cash flows resulting from these tax benefits as financing cash flows. We either issue new shares of our common stock or utilize treasury shares upon the exercise of stock options or the conversion of stock units. Shares Authorized for Grant As of December 31, 2018, an aggregate of 1.3 million shares were authorized for future grant under our stock plan, which covers stock options, RSUs, PRSUs and at the discretion of Hexcel, could result in the issuance of other types of stock-based awards. Employee Stock Purchase Plan (“ESPP”) The Company offers an ESPP, which allows for eligible employees to contribute up to 10% of their base earnings, to a maximum of $25,000 in a calendar year, toward the quarterly purchase of our common stock at a purchase price equal to 85% of the fair market value of the common stock. There were 57,788 and 52,824 ESPP shares purchased in 2018 and 2017, 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://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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