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Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Equity Compensation Awards Stock Options Stock options have been granted under various equity compensation plans. While we may grant options to employees that become exercisable at different times or within different periods, we have generally granted options to employees that vest and become exercisable in one-third increments on the second, third and fourth anniversaries of the grant dates. The maximum contractual term for all options is normally ten years. We use the Black-Scholes option-pricing model to calculate the grant-date fair value of an option. We have not granted any stock options since the first quarter of 2012. In most cases, we recognize expense using the straight-line method for stock option grants. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. Cancellations and expirations both refer to vested options. We currently expect, based on an analysis of our historical forfeitures, an annual forfeiture rate of approximately 3% and applied that rate to the grants issued. This assumption will be reviewed periodically and the rate will be adjusted as necessary based on these reviews. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. During the three and nine month periods ended September 30, 2014, we recognized approximately $0.1 million and $0.3 million of stock option compensation expense, respectively. During the three and nine month periods ended September 30, 2013, we recognized approximately $0.3 million of income and $0.3 million of stock option compensation expense, respectively. Income was recognized in the third quarter of 2013, of $0.7 million, due to an adjustment to expense related to employee terminations in previous years based on historical activity to ensure that the amount expensed is only for options that ultimately vest and not for those options that are forfeited. This income was reduced during the quarter, as an officer left the company, resulting in the forfeiture of two stock option grants and the modification of one stock option grant resulting in $0.2 million of expense, net. A summary of the activity under our stock option plans as of September 30, 2014 and changes during the three and nine month periods then ended, is presented below:
| Options Outstanding |  | Weighted- Average Exercise Price Per Share |  | Weighted-Average Remaining Contractual Life in Years |  | Aggregate Intrinsic Value
Options outstanding at June 30, 2014 | 556,612 |  |  | $ | 40.96 |  |  | 4.3 |  | $ | 14,132,906 |
Options granted | — |  |  | — |  |  |  |  |  |
Options exercised | (42,689 | ) |  | 34.37 |  |  |  |  |  |
Options forfeited | (2,099 | ) |  | 36.26 |  |  |  |  |  |
Options outstanding at September 30, 2014 | 511,824 |  |  | 41.53 |  |  | 4.1 |  | 6,976,521 |
Options exercisable at September 30, 2014 | 453,994 |  |  | 41.12 |  |  | 3.6 |  | 6,394,886 |
Options vested or expected to vest at September 30, 2014* | 510,089 |  |  | 41.52 |  |  | 4.1 |  | 6,959,072 |
* In addition to the vested options, we expect a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.
| Options Outstanding |  | Weighted- Average Exercise Price Per Share
Options outstanding at December 31, 2013 | 893,139 |  |  | $ | 43.23 |
Options granted | — |  |  | — |
Options exercised | (358,316 | ) |  | 44.72 |
Options forfeited | (22,999 | ) |  | 57.07 |
Options outstanding at September 30, 2014 | 511,824 |  |  |  |
During the nine month period ended September 30, 2014, the total intrinsic value of options exercised (i.e., the difference between the market price at time of exercise and the price paid by the individual to exercise the options) was $6.7 million, and the total amount of cash received from the exercise of these options was $15.6 million. Performance-Based Restricted Stock In 2006, we began granting performance-based restricted stock awards. We currently have awards from 2012, 2013 and 2014 outstanding. These awards cliff vest at the end of the three year measurement period, except for the 2012 grants to those individuals who are retirement eligible during the grant period, as such grants are subject to accelerated vesting as the grant is earned over the course of the vesting period (i.e. a pro-rata payout occurs based on the actual retirement date if it occurs during the vesting period). Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined measurement criteria. Compensation expense is recognized using the straight-line method over the vesting period, unless the employee has an accelerated vesting schedule. The 2012 awards have three measurement criteria on which the final payout of the award is based - (i) the three year compounded annual growth rate (CAGR) of net sales, (ii) the three year CAGR of diluted earnings per share, and (iii) the three year average of each year's free cash flow as a percentage of net sales. In accordance with the applicable accounting literature, these measures are treated as performance conditions. The fair value of these awards is determined based on the market value of the underlying stock price at the grant date with cumulative compensation expense recognized to date being increased or decreased based on changes in the forecasted pay out percentages at the end of each reporting period. The 2013 and 2014 awards have two measurement criteria on which the final payout of each award is based - (i) the three year return on invested capital (ROIC) compared to that of a specified group of peer companies, and (ii) the three year total shareholder return (TSR) on the performance of our common stock as compared to that of a specified group of peer companies. In accordance with the applicable accounting literature, the ROIC portion of each award is considered a performance condition. As such, the fair value of each award is determined based on the market value of the underlying stock price at the grant date with cumulative compensation expense recognized to date being increased or decreased based on changes in the forecasted pay out percentage at the end of each reporting period. The TSR portion of the award is considered a market condition. As such, the fair value of this award was determined on the date of grant using a Monte Carlo simulation valuation model with related compensation expense fixed on the grant date and expensed on a straight-line basis over the life of the awards that ultimately vest with no changes for the final projected payout of the award. The amount of performance-based restricted stock compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” and represents only the unvested portion of the surrendered award. Cancellations refer to vested awards. We currently expect, based on an analysis of our historical forfeitures, an annual forfeiture rate of approximately 7% and applied that rate to the grants issued. This assumption is reviewed periodically and the rate is adjusted as necessary based on these reviews. Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest. Below are the assumptions used in the Monte Carlo calculation:
| September 30, 2014 |  | September 30, 2013
Expected volatility | 33.7% |  | 37.1%
Expected term (in years) | 3.0 |  | 3.0
Risk-free interest rate | 0.67% |  | 0.40%
Expected dividend yield | — |  | —
Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility. Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model. Risk-free interest rate – We use an implied "spot rate" yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate. Expected dividend yield – We do not currently pay dividends on our common stock; therefore, a dividend yield of 0% was used in the Monte Carlo simulation valuation model. Actual performance during the relevant period for the 2011 award, which vested as of December 31, 2013, met the target performance criteria and shares were paid out at 108.3% of target during the first quarter of 2014.
| Performance-Based Restricted Stock Awards
Non-vested awards outstanding at December 31, 2013 | 71,175 |
Awards granted | 49,700 |
Stock issued | (14,383 | )
Awards forfeited | (15,005 | )
Non-vested awards outstanding at September 30, 2014 | 91,487 |
During the three and nine month periods ended September 30, 2014, we recognized compensation expense for performance-based restricted stock awards of approximately $0.2 million and $1.5 million, respectively. During the three and nine month periods ended September 30, 2013, we recognized compensation expense for performance-based restricted stock awards of approximately $0.5 million and $0.6 million, respectively. Time-Based Restricted Stock In 2011, we began granting time-based restricted stock awards to certain key executives and other key members of the Company’s management team. We currently have grants from 2011, 2012, 2013 and 2014 outstanding. Most of the 2011 and 2012 grants cliff vest at the end of the three year vesting period. The 2013 and 2014 grants ratably vest on the first, second and third anniversaries of the original grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. The fair value of the award is determined based on the market value of the underlying stock price at the grant date. The amount of time-based restricted stock compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” and represents only the unvested portion of the surrendered award. Cancellations refer to vested awards. We currently expect, based on an analysis of our historical forfeitures, an annual forfeiture rate of approximately 7% and applied that rate to the grants issued. This assumption will be reviewed periodically and the rate will be adjusted as necessary based on these reviews. Ultimately, the actual expense recognized over the vesting period will only be for those awards that vest.
| Time-Based Restricted Stock Awards
Non-vested awards outstanding at December 31, 2013 | 231,026 |
Awards granted | 68,630 |
Stock issued | (55,992 | )
Awards forfeited | (18,278 | )
Non-vested awards outstanding at September 30, 2014 | 225,386 |
During the three and nine month periods ended September 30, 2014, we recognized compensation expense for time-based restricted stock awards of approximately $0.7 million and $2.7 million, respectively. During the three and nine month periods ended September 30, 2013, we recognized compensation expense for time-based restricted stock awards of approximately $1.2 million and $1.8 million, respectively. Deferred Stock Units We grant deferred stock units to non-management directors. These awards are fully vested on the date of grant and the related shares are generally issued on the 13 th month anniversary of the grant date unless the individual elects to further defer the receipt of those shares. Each deferred stock unit results in the issuance of one share of Rogers’ stock. The grant of deferred stock units is typically done annually in the second quarter of each year. The fair value of the award is determined based on the market value of the underlying stock price at the grant date.
| Deferred Stock Units
Awards outstanding at December 31, 2013 | 31,550 |
Awards granted | 13,600 |
Stock issued | (16,100 | )
Awards outstanding at September 30, 2014 | 29,050 |
For the nine month periods ended September 30, 2014 and 2013 we recognized compensation expense for deferred stock units of $0.8 million and $0.7 million, respectively. There was no expense associated with the deferred stock units in the third quarter of 2014 or 2013. Employee Stock Purchase Plan We have an employee stock purchase plan (ESPP) that allows eligible employees to purchase, through payroll deductions, shares of our common stock at a discount to fair market value. The ESPP has two six month offering periods each year, the first beginning in January and ending in June and the second beginning in July and ending in December. The ESPP contains a look-back feature that allows the employee to acquire stock at a 15% discount from the underlying market price at the beginning or end of the applicable period, whichever is lower. We recognize compensation expense on this plan ratably over the offering period based on the fair value of the anticipated number of shares that will be issued at the end of each offering period. Compensation expense is adjusted at the end of each offering period for the actual number of shares issued. Fair value is determined based on two factors: (i) the 15% discount amount on the underlying stock’s market value on the first day of the applicable offering period and (ii) the fair value of the look-back feature determined by using the Black-Scholes model. We recognized approximately $0.1 million of compensation expense associated with the plan for each of the three month periods ended September 30, 2014 and 2013, and approximately $0.3 million of compensation expense associated with each of the nine month periods ended September 30, 2014 and 2013.

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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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