XML 77 R11.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Share-Based Compensation | 12 Months Ended
--- | ---
Dec. 31, 2011
Share-Based Compensation |
Share-Based Compensation |
(4) Share-Based Compensation Prior to CVR's initial public offering, CVR's subsidiaries were held and operated by CALLC, a limited liability company. Management of CVR held an equity interest in CALLC. CALLC issued non-voting override units to certain management members who held common units of CALLC. There were no required capital contributions for the override operating units. In connection with CVR's initial public offering in October 2007, CALLC was split into two entities: CALLC and CALLC II. In connection with this split, management's equity interest in CALLC, including both their common units and non-voting override units, was split so that half of management's equity interest was in CALLC and half was in CALLC II. In addition, in connection with the transfer of the managing general partner of the Partnership to CALLC III in October 2007, CALLC III issued non-voting override units to certain management members of CALLC III. For the years ended December 31, 2011, 2010 and 2009, CVR, CALLC, CALLC II accounted for share-based compensation in accordance with standards issued by the FASB regarding the treatment of share-based compensation, as well as guidance regarding the accounting for share-based compensation granted to employees of an equity method investee. CVR was allocated non-cash share-based compensation expense from CALLC, CALLC II and CALLC III. In February 2011, CALLC and CALLC II sold into the public market 11,759,023 shares and 15,113,254 shares, respectively, of CVR's common stock, pursuant to a registered public offering. In May 2011, CALLC sold into the public market 7,988,179 shares of CVR's common stock, pursuant to a registered public offering. As a result, CALLC and CALLC II ceased to be stockholders of the Company. Subsequent to CALLC II's divestiture of its ownership interest in the Company in February 2011 and CALLC's divestiture of its ownership interest in the Company in May 2011, no additional share-based compensation expense has been incurred with respect to override units and phantom units after each respective divestiture date. The final fair values of the override units of CALLC and CALLC II were derived based upon the values resulting from the proceeds received associated with each entity's respective divestiture of its ownership in CVR. These values were utilized to determine the related compensation expense for the unvested units. The final fair value of the CALLC III override units was derived based upon the value, resulting from the proceeds received by the general partner upon the purchase of the IDR's by the Partnership. These proceeds were subsequently distributed to the owners of CALLC III which includes the override unitholders. This value was utilized to determine the related compensation expense for the unvested units. No additional share-based compensation has been or will be incurred with respect to override units of CALLC III subsequent to June 30, 2011 due to the complete distribution of the value prior to July 1, 2011. For the year ended December 31, 2010, the estimated fair value of the CALLC III override units were determined using a probability-weighted expected return method which utilized CALLC III's cash flow projections and also considered the proposed initial public offering of the Partnership, including the purchase of the managing GP interest (including the IDRs). For the year ended December 31, 2009, the estimated fair value of the override units of CALLC III was determined using a probability-weighted expected return method which utilized CALLC III's cash flow projections. The following table provides key information for the share-based compensation plans related to the override units of CALLC, CALLC II, and CALLC III.
|  |  |  |  |  |  |  | Compensation Expense Increase (Decrease) for the Year Ended December 31, |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | Benchmark Value (per Unit) |  | Original Awards Issued |  |  |
Award Type |  | Grant Date |  | 2011 |  | 2010 |  | 2009 |
|  |  |  |  |  |  |  | (in thousands) |
Override Operating Units(a) |  | $ | 11.31 |  |  | 919,630 |  | June 2005 |  | $ | — |  | $ | 338 |  | $ | 1,369 |
Override Operating Units(b) |  | $ | 34.72 |  |  | 72,492 |  | December 2006 |  |  | — |  |  | 13 |  |  | 36 |
Override Value Units(c) |  | $ | 11.31 |  |  | 1,839,265 |  | June 2005 |  |  | 4,960 |  |  | 17,586 |  |  | 2,690 |
Override Value Units(d) |  | $ | 34.72 |  |  | 144,966 |  | December 2006 |  |  | 451 |  |  | 581 |  |  | 37 |
Override Units(e) |  | $ | 10.00 |  |  | 642,219 |  | February 2008 |  |  | 184 |  |  | 772 |  |  | 26 |
|  |  |  |  |  |  |  | Total |  | $ | 5,595 |  | $ | 19,290 |  | $ | 4,158 |
Due to the divestiture of all ownership in CVR by CALLC and CALLC II and due to the purchase of IDRs from the general partner and the distribution to CALLC III, there is no associated unrecognized compensation expense as of December 31, 2011. Valuation Assumptions Significant assumptions used in the valuation of the Override Operating Units (a) and (b) were as follows:
|  | (a) Override Operating Units December 31, |  | (b) Override Operating Units December 31, |
--- | --- | --- | --- | --- | ---
|  | 2009 |  | 2009 |
Estimated forfeiture rate |  |  | None |  |  | None |
CVR closing stock price |  | $ | 6.86 |  | $ | 6.86 |
Estimated weighted-average fair value (per unit) |  | $ | 11.95 |  | $ | 1.40 |
Marketability and minority interest discounts |  |  | 20.0 | % |  | 20.0 | %
Volatility |  |  | 50.7 | % |  | 50.7 | %
On the tenth anniversary of the issuance of override operating units, such units convert into an equivalent number of override value units. Override operating units are forfeited upon termination of employment for cause. As of December 31, 2010 these units were fully vested. Significant assumptions used in the valuation of the Override Value Units (c) and (d) were as follows:
|  | (c) Override Value Units December 31, |  | (d) Override Value Units December 31, |
--- | --- | --- | --- | --- | ---
|  | 2010 |  | 2009 |  | 2010 |  | 2009 |
Estimated forfeiture rate |  |  | None |  |  | None |  |  | None |  |  | None |
Derived service period |  |  | 6 years |  |  | 6 years |  |  | 6 years |  |  | 6 years |
CVR closing stock price |  | $ | 15.18 |  | $ | 6.86 |  | $ | 15.18 |  | $ | 6.86 |
Estimated weighted-average fair value (per unit) |  | $ | 22.39 |  | $ | 5.63 |  | $ | 6.56 |  | $ | 1.39 |
Marketability and minority interest discounts |  |  | 20.0 | % |  | 20.0 | % |  | 20.0 | % |  | 20.0 | %
Volatility |  |  | 43.0 | % |  | 50.7 | % |  | 43.0 | % |  | 50.7 | %
(e) Override Units — Using a probability-weighted expected return method which utilized CALLC III's cash flow projections and included expected future earnings and the anticipated timing of IDRs, the estimated grant date fair value of the override units was approximately $3,000. As a non-contributing investor, CVR also recognized income equal to the amount that its interest in the investee's net book value has increased (that is its percentage share of the contributed capital recognized by the investee) as a result of the disproportionate funding of the compensation cost. Of the 642,219 units issued, 109,720 were immediately vested upon issuance and the remaining units were subject to a forfeiture schedule. Significant assumptions used in the valuation were as follows:
|  | December 31,
--- | --- | ---
|  | 2010 |  | 2009
Estimated forfeiture rate |  | None |  | None
Derived Service Period |  | Based on forfeiture schedule |  | Based on forfeiture schedule
Estimated fair value (per unit) |  | $2.60 |  | $0.08
Marketability and minority interest discount |  | 10.0% |  | 20.0%
Volatility |  | 47.6% |  | 59.7%
Phantom Unit Appreciation Plan CVR, through a wholly-owned subsidiary, has two Phantom Unit Appreciation Plans (the "Phantom Unit Plans") whereby directors, employees, and service providers may be awarded phantom points at the discretion of the board of directors or the compensation committee. Holders of service phantom points have rights to receive distributions when CALLC and CALLC II holders of override operating units receive distributions. Holders of performance phantom points have rights to receive distributions when CALLC and CALLC II holders of override value units receive distributions. There are no other rights or guarantees, and the plans expire on July 25, 2015, or at the discretion of the compensation committee of the board of directors. In November 2010, through a registered offering of CVR common stock, CALLC and CALLC II sold into the public market common shares of CVR. As a result of this offering, the Company made a payment to phantom unit holders totaling approximately $3.6 million. In November 2009, CALLC II completed a sale of common shares of CVR as afforded by a registered offering into the public market. As a result of this sale, the Company made a payment to phantom unit holders totaling approximately $0.9 million. As described above, in February 2011, CALLC and CALLC II completed a sale of CVR common stock into the public market pursuant to a registered public offering. As a result of this offering, the Company made a payment to phantom unitholders of approximately $20.1 million in the first quarter of 2011. As described above, in May 2011, CALLC completed an additional sale of CVR common stock into the public market pursuant to a registered public offering. As a result of this offering, the Company made a payment to phantom unitholders of approximately $9.2 million in the second quarter of 2011. Due to the divestiture of all ownership of CVR by CALLC and CALLC II and the associated payments to the holders of service and phantom performance points, there is no unrecognized compensation expense at December 31, 2011. CVR has recorded approximately $0.0 and $18.7 million in personnel accruals as of December 31, 2011 and 2010, respectively. Compensation expense for the years ended December 31, 2011, 2010 and 2009 related to the Phantom Unit Plans was approximately $10.6 million, $15.5 million and $3.7 million, respectively. Using the Company's closing stock price at December 31, 2010, to determine the Company's equity value, through an independent valuation process, the service phantom interest and performance phantom interest were valued as follows:
|  | December 31, |
--- | --- | --- | ---
|  | 2010 |  | 2009 |
Service Phantom interest (per point) |  | $ | 14.64 |  | $ | 11.37 |
Performance Phantom interest (per point) |  | $ | 21.25 |  | $ | 5.48 |
Long-Term Incentive Plan CVR has a Long-Term Incentive Plan ("LTIP"), which permits the grant of options, stock appreciation rights, non-vested shares, non-vested share units, dividend equivalent rights, share awards and performance awards (including performance share units, performance units and performance-based restricted stock). As of December 31, 2011, only restricted shares of CVR common stock and stock options had been granted under the LTIP. Individuals who are eligible to receive awards and grants under the LTIP include the Company's employees, officers, consultants, advisors and directors. A summary of the principal features of the LTIP is provided below. Shares Available for Issuance. The LTIP authorizes a share pool of 7,500,000 shares of the Company's common stock, 1,000,000 of which may be issued in respect of incentive stock options. Whenever any outstanding award granted under the LTIP expires, is canceled, is settled in cash or is otherwise terminated for any reason without having been exercised or payment having been made in respect of the entire award, the number of shares available for issuance under the LTIP is increased by the number of shares previously allocable to the expired, canceled, settled or otherwise terminated portion of the award. As of December 31, 2011, 5,176,087 shares of common stock were available for issuance under the LTIP. Restricted Stock A summary of restricted stock grant activity and changes during the years ended December 31, 2011, 2010 and 2009 is presented below:
|  | Shares |  | Weighted- Average Grant-Date Fair Value |  | Aggregate Intrinsic Value (in thousands) |
--- | --- | --- | --- | --- | --- | --- | ---
Non-vested at December 31, 2008 |  |  | 78,666 |  | $ | 6.62 |  | $ | 315 |
Granted |  |  | 202,257 |  |  | 6.68 |  |  |  |
Vested |  |  | (100,763 | ) |  | 6.86 |  |  |  |
Forfeited |  |  | (3,100 | ) |  | 4.14 |  |  |  |
Non-vested at December 31, 2009 |  |  | 177,060 |  | $ | 6.59 |  | $ | 1,215 |
Granted |  |  | 1,307,378 |  |  | 11.42 |  |  |  |
Vested |  |  | (113,457 | ) |  | 9.79 |  |  |  |
Forfeited |  |  | (1,799 | ) |  | 4.14 |  |  |  |
Non-vested at December 31, 2010 |  |  | 1,369,182 |  | $ | 10.94 |  | $ | 20,784 |
Granted |  |  | 826,959 |  |  | 18.79 |  |  |  |
Vested |  |  | (557,355 | ) |  | 11.83 |  |  |  |
Forfeited |  |  | (4,632 | ) |  | 8.67 |  |  |  |
Non-vested at December 31, 2011 |  |  | 1,634,154 |  | $ | 14.61 |  | $ | 30,608 |
As of December 31, 2011, there was approximately $19.5 million of total unrecognized compensation cost related to non-vested shares to be recognized over a weighted-average period of approximately two years. The aggregate fair value at the grant date of the shares that vested during the year ended December 31, 2011 was approximately $6.6 million. As of December 31, 2011, 2010 and 2009, unvested stock outstanding had an aggregate fair value at grant date of approximately $23.9 million, $15.0 million and $1.2 million, respectively. Total compensation expense for the years ended December 31, 2011, 2010 and 2009, related to the non-vested stock was approximately $9.8 million, $2.4 million and $0.8 million, respectively. Stock Options Activity and price information regarding CVR's stock options granted are summarized as follows:
|  | Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term |
--- | --- | --- | --- | --- | --- | --- | ---
Outstanding, December 31, 2008 |  |  | 32,350 |  | $ | 19.08 |  |  | 9.21 |
Granted |  |  | — |  |  | — |  |  |  |
Exercised |  |  | — |  |  | — |  |  |  |
Forfeited |  |  | — |  |  | — |  |  |  |
Expired |  |  | — |  |  | — |  |  |  |
Outstanding, December 31, 2009 |  |  | 32,350 |  | $ | 19.08 |  |  | 8.21 |
Granted |  |  | — |  |  | — |  |  |  |
Exercised |  |  | — |  |  | — |  |  |  |
Forfeited |  |  | (3,149 | ) |  | 21.61 |  |  |  |
Expired |  |  | (6,301 | ) |  | 21.61 |  |  |  |
Outstanding, December 31, 2010 |  |  | 22,900 |  | $ | 18.03 |  |  | 8.35 |
Granted |  |  | — |  |  | — |  |  |  |
Exercised |  |  | — |  |  | — |  |  |  |
Forfeited |  |  | — |  |  | — |  |  |  |
Expired |  |  | — |  |  | — |  |  |  |
Outstanding, December 31, 2011 |  |  | 22,900 |  | $ | 18.03 |  |  | 7.35 |
Exercisable at December 31, 2011 |  |  | 22,900 |  | $ | 18.03 |  |  | 7.35 |
There were no grants of stock options in 2011, 2010 or 2009. The weighted-average grant-date fair value of options granted during the year ended December 31, 2008 was $8.97 per share. The aggregate intrinsic value of options exercisable at December 31, 2011, was approximately $70,000. Total compensation expense for the years ended December 31, 2011, 2010 and 2009, related to the stock options was $8,000, $9,000 and $118,000, respectively. CVR Partners Long-Term Incentive Plan In April 2011, the board of directors of the general partner adopted the CVR Partners, LP Long-Term Incentive Plan ("CVR Partners LTIP"). Individuals who are eligible to receive awards under the CVR Partners LTIP include employees, officers, consultants and directors of CVR Partners and its general partner and their respective subsidiaries' parents. The CVR Partners LTIP provides for the grant of options, unit appreciation rights, distribution equivalent rights, restricted units, phantom units and other unit-based awards, each in respect of common units. The maximum number of common units issuable under the CVR Partners' LTIP is 5,000,000. In April 2011, 23,448 phantom units were granted to certain board members of the Partnership's general partner. These phantom unit awards granted to the directors of the general partner are considered non-employee equity-based awards since the directors are not elected by unitholders. These phantom unit director awards were required to be marked-to-market each reporting period until they vested on October 12, 2011. In June 2011, 50,659 phantom units were granted to an employee of the general partner. These phantom units are expected to vest over three years on the basis of one-third of the award each year. As this phantom unit award, which is an equity-based award, was granted to an employee of a subsidiary of the Company, it was valued at the closing unit price of the Partnership's common units on the date of grant and will be amortized to compensation expense on a straight-line basis over the vesting period of the award. In June 2011, 2,956 fully vested common units were granted to certain board members of the general partner. The fair value of these awards was calculated using the closing price of the Partnership's common units on the date of grant. This amount was fully expensed at the time of grant. In August 2011, 12,815 phantom units were granted to an employee of the general partner. These phantom units are expected to vest over three years on the basis of one-third of the award each year. As these phantom awards were made to an employee of the general partner, they are considered non-employee equity-based awards and are required to be marked-to-market each reporting period until they vest. In December 2011, 9,672 fully vested common units were granted to certain board members of the general partner. The fair value of these awards was calculated using the closing price of the Partnership's common units on the date of the grant. The amount was fully expensed at the time of the grant. In December 2011, 101,097 phantom units were granted to certain employees of the general partner and CRNF and one employee of CVR Energy who dedicated 100% of his time to CVR Partners' business in 2011. These phantom units are expected to vest over three years on the basis of one-third of the award each year. For the phantom unit awards made to employees of the general partner, they are considered non-employee equity-based awards and are required to be marked-to-market each reporting period until they vest. Awards made to employees of CRNF are valued on the grant date and amortized over the vesting period. Compensation expense recorded for the years ended December 31, 2011, 2010 and 2009, related to the awards under the CVR Partners LTIP was approximately $1.2 million, $0 and $0, respectively. Compensation expense associated with the awards under the CVR Partners' LTIP has been recorded in selling, general and administrative expenses (exclusive of depreciation and amortization). As of December 31, 2011, there were 4,799,353 common units available for issuance under the CVR Partners LTIP. Unrecognized compensation expense associated with the unvested phantom units at December 31, 2011 was approximately $3.6 million.

X
- Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: 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 6: 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 7: 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 8: 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 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration