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Long-term Equity-based Compensation Plans | 9 Months Ended
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Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Long-term Equity-based Compensation Plans | Note 5 - Long-term Equity-based Compensation Plans As of September 30, 2014, there were 8,187,286 common shares available for future grants under Kemper’s long-term equity-based compensation plan, of which 538,050 shares were reserved for future grants based on the performance level attained under the terms of outstanding performance-based restricted stock and performance-based restricted stock unit (“RSU”) awards. Equity-based compensation expense was $5.8 million and $4.4 million for the nine months ended September 30, 2014 and 2013, respectively. Total unamortized compensation expense related to nonvested awards at September 30, 2014 was $5.6 million, which is expected to be recognized over a weighted-average period of 1.9 years. Outstanding equity-based compensation awards at December 31, 2013 consisted of tandem stock option and stock appreciation rights (“Tandem Awards”), time-vested restricted stock, performance-based restricted stock and deferred stock units (“DSUs”). Effective February 4, 2014, the Company began issuing time-based and performance-based RSUs. Recipients of restricted stock receive full dividend and voting rights on the same basis as all other outstanding shares of Kemper common stock. Recipients of RSUs and DSUs receive full dividend equivalents on the same basis as all other outstanding shares of Kemper common stock, but do not receive voting rights until such shares are issued. Except for equity-based compensation awards granted to each member of the Board of Directors who is not employed by the Company (“Non-employee Directors”), all outstanding awards are subject to forfeiture until certain restrictions have lapsed. Note 5 - Long-term Equity-based Compensation Plans (continued) The Company uses the Black-Scholes option pricing model to estimate the fair value of each Tandem Award on the date of grant. The assumptions used in the Black-Scholes pricing model for Tandem Awards granted during the nine months ended September 30, 2014 and 2013 were as follows:
| Nine Months Ended
| Sep 30, 2014 |  | Sep 30, 2013
Range of Valuation Assumptions |  |  |  |  |  |  |
Expected Volatility | 25.76 | % | - | 44.43 | % |  | 39.10 | % | - | 48.23 | %
Risk-free Interest Rate | 1.07 |  | - | 2.14 |  |  | 0.62 |  | - | 1.38 |
Expected Dividend Yield | 2.53 |  | - | 2.60 |  |  | 2.83 |  | - | 3.00 |
Weighted-Average Expected Life in Years |  |  |  |  |  |  |  |  |
Employee Grants | 4 |  | - | 7 |  | 4 |  | - | 7
Director Grants | 6 |  | 6
Tandem Award activity for the nine months ended September 30, 2014 is presented below.
| Shares Subject to Award |  | Weighted- Average Exercise Price Per Share ($) |  | Weighted- Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value ($ in Millions)
Outstanding at Beginning of the Year | 2,543,673 |  |  | $ | 41.37 |  |  |  |  |
Granted | 289,000 |  |  | 36.59 |  |  |  |  |
Exercised | (26,375 | ) |  | 28.76 |  |  |  |  |
Forfeited or Expired | (492,248 | ) |  | 47.56 |  |  |  |  |
Outstanding at September 30, 2014 | 2,314,050 |  |  | $ | 39.61 |  |  | 4.20 |  | $ | 3.1 |
Vested and Expected to Vest at September 30, 2014 | 2,289,388 |  |  | $ | 39.67 |  |  | 4.16 |  | $ | 3.1 |
Exercisable at September 30, 2014 | 1,970,046 |  |  | $ | 40.49 |  |  | 3.41 |  | $ | 2.8 |
The weighted-average grant-date fair values of Tandem Awards granted during the nine months ended September 30, 2014 and 2013 were $10.49 per option and $10.20 per option, respectively. Total intrinsic value of Tandem Awards exercised was $0.3 million and $1.8 million for the nine months ended September 30, 2014 and 2013, respectively. The total tax benefit realized for tax deductions from exercises of Tandem Awards was $0.1 million and $0.6 million for the nine months ended September 30, 2014 and 2013, respectively. Cash received from exercises of Tandem Awards was insignificant for the nine months ended September 30, 2014. Cash received from exercises of Tandem Awards was $0.6 million for the nine months ended September 30, 2013. Note 5 - Long-term Equity-based Compensation Plans (continued) Information pertaining to Tandem Awards outstanding at September 30, 2014 is presented below.
|  |  |  | Outstanding |  | Exercisable
Range of Exercise Prices |  | Shares Subject to Award |  | Weighted- Average Exercise Price Per Share ($) |  | Weighted- Average Remaining Contractual Life (in Years) |  | Shares Subject to Tandem Award |  | Weighted- Average Exercise Price Per Share ($)
$ | 10.00 |  | - | $ | 15.00 |  |  | 16,750 |  |  | $ | 13.55 |  |  | 2.70 |  | 16,750 |  |  | $ | 13.55 |
15.01 |  | - | 20.00 |  |  | 8,000 |  |  | 16.48 |  |  | 4.60 |  | 8,000 |  |  | 16.48 |
20.01 |  | - | 25.00 |  |  | 30,750 |  |  | 23.38 |  |  | 4.18 |  | 30,750 |  |  | 23.38 |
25.01 |  | - | 30.00 |  |  | 389,000 |  |  | 28.85 |  |  | 6.71 |  | 339,248 |  |  | 28.74 |
30.01 |  | - | 35.00 |  |  | 243,750 |  |  | 33.18 |  |  | 8.29 |  | 140,500 |  |  | 32.98 |
35.01 |  | - | 40.00 |  |  | 586,625 |  |  | 36.90 |  |  | 6.26 |  | 395,623 |  |  | 37.11 |
40.01 |  | - | 45.00 |  |  | 185,902 |  |  | 43.10 |  |  | 0.34 |  | 185,902 |  |  | 43.10 |
45.01 |  | - | 50.00 |  |  | 796,505 |  |  | 48.59 |  |  | 1.41 |  | 796,505 |  |  | 48.59 |
50.01 |  | - | 55.00 |  |  | 56,768 |  |  | 51.16 |  |  | 0.35 |  | 56,768 |  |  | 51.16 |
10.00 |  | - | 55.00 |  |  | 2,314,050 |  |  | 39.61 |  |  | 4.20 |  | 1,970,046 |  |  | 40.49 |
The grant-date fair values of time-based restricted stock and time-based RSU awards are determined using the closing price of Kemper common stock on the date of grant. Activity related to nonvested time-based restricted stock and nonvested time-based RSUs for the nine months ended September 30, 2014 was as follows:
| Time-based Restricted Stock Awards |  | Time-based RSU Awards
| Number of Shares |  | Weighted- Average Grant-Date Fair Value Per Share |  | Number of RSUs |  | Weighted- Average Grant-Date Fair Value Per RSU
Nonvested Balance at Beginning of the Year | 101,627 |  |  | $ | 31.48 |  |  | — |  |  | $ | — |
Granted | 2,000 |  |  | 38.59 |  |  | 41,925 |  |  | 36.56 |
Vested | (25,568 | ) |  | 30.56 |  |  | (9,351 | ) |  | 36.47 |
Forfeited | (21,789 | ) |  | 31.00 |  |  | (1,500 | ) |  | 36.47 |
Nonvested Balance at End of Period | 56,270 |  |  | 32.33 |  |  | 31,074 |  |  | 36.60 |
Note 5 - Long-term Equity-based Compensation Plans (continued) The grant-date fair values of the performance-based restricted stock and performance-based RSU awards are determined using the Monte Carlo simulation method. Activity related to nonvested performance-based restricted stock and nonvested performance-based RSUs for the nine months ended September 30, 2014 was as follows:
| Performance-based Restricted Stock Awards |  | Performance-based RSU Awards
| Number of Shares |  | Weighted- Average Grant-Date Fair Value Per Share |  | Number of RSUs |  | Weighted- Average Grant-Date Fair Value Per RSU
Nonvested Balance at Beginning of the Year | 176,800 |  |  | $ | 39.54 |  |  | — |  |  | $ | — |
Granted | — |  |  | — |  |  | 66,575 |  |  | 40.50 |
Vested | (54,934 | ) |  | 39.83 |  |  | — |  |  | — |
Forfeited | (7,691 | ) |  | 40.12 |  |  | (1,400 | ) |  | 40.50 |
Nonvested Balance at End of Period | 114,175 |  |  | 39.37 |  |  | 65,175 |  |  | 40.50 |
The initial number of shares or RSUs awarded to each participant of a performance-based award represents the shares that would vest, or, in the case of a RSU, that would vest and would be issued, if the performance level attained were to be at the “target” performance level. For performance above the target level, each participant would receive a grant of additional shares of stock up to a maximum of 100% of the initial number of shares or RSUs awarded to the participant. The final payout of these awards will be determined based on Kemper’s total shareholder return over a three-year performance period relative to a peer group comprised of all the companies in the S&P Supercomposite Insurance Index. The number of additional shares that would be granted if the Company were to meet or exceed the maximum performance levels related to the outstanding performance-based awards for the 2014, 2013 and 2012 three-year performance periods was 65,175 common shares, 56,400 common shares and 57,775 common shares, respectively, at September 30, 2014. For the 2011 three-year performance period, the Company exceeded target performance levels with a total payout percentage, including the target payout percentage, of 118%. Accordingly, an additional 9,014 shares of stock were issued to award recipients on February 1, 2014 (the “2011 Additional Shares”). The total fair value of the shares of restricted stock and RSUs that vested during the nine months ended September 30, 2014 and the 2011 Additional Shares that were issued was $3.6 million and the tax benefits for tax deductions realized from such shares was $1.2 million. The total fair value of the shares of restricted stock that vested during the nine months ended September 30, 2013 and the additional shares that were issued in connection with the 2010 performance-based restricted stock awards was $4.0 million and the tax benefits for tax deductions realized from such shares was $1.4 million. The grant-date fair values of DSU awards granted to Non-employee Directors are determined using the closing price of Kemper common stock on the date of grant. DSU awards granted to Non-employee Directors are fully vested on the date of grant. Activity related to DSU awards for the nine months ended September 30, 2014 was as follows:
| Number of DSUs |  | Weighted- Average Grant-Date Fair Value Per DSU
Vested Balance at Beginning of the Year | 4,000 |  |  | $ | 31.50 |
Granted and Vested | 4,000 |  |  | 37.53 |
Vested Balance at End of Period | 8,000 |  |  | 34.52 |

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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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