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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation We use various forms of share-based compensation, which are summarized below. One stock unit is equivalent to one common share for accounting and earnings-per-share purposes. Shares are issued from treasury for the majority of our stock plans’ activity. All share information is presented in millions. Stock options and stock units are granted pursuant to our Flexible Stock Plan (the "Plan"). Each option counts as one share against the shares available under the Plan, but each share granted for any other awards will count as three shares against the Plan. At December 31, 2023, the following common shares were authorized for issuance under the Plan:
| Shares Available for Issuance |  | Maximum Number of Authorized Shares
Unexercised options | .4 |  |  | .4 |
Outstanding stock units—vested | 3.5 |  |  | 9.6 |
Outstanding stock units—unvested | 1.0 |  |  | 2.9 |
Available for grant | 6.0 |  |  | 6.0 |
Authorized for issuance at December 31, 2023 | 10.9 |  |  | 18.9 |
The following table recaps the impact of stock-based compensation on the results of operations for each of the periods presented:
| Year Ended December 31
| 2023 |  | 2022 |  | 2021
| To Be Settled With Stock |  | To Be Settled In Cash |  | To Be Settled With Stock |  | To Be Settled In Cash |  | To Be Settled With Stock |  | To Be Settled In Cash
Executive Stock Unit (ESU) program contributions 1 | $ | 3.0 |  |  | $ | .7 |  |  | $ | 3.7 |  |  | $ | .7 |  |  | $ | 4.0 |  |  | $ | .6 |
Discounts on various stock awards: |  |  |  |  |  |  |  |  |  |  |
Deferred Stock Compensation Program 2 | 1.5 |  |  | — |  |  | 1.6 |  |  | — |  |  | 1.5 |  |  | — |
ESU program 1 | 1.2 |  |  | — |  |  | 1.4 |  |  | — |  |  | 1.1 |  |  | — |
Discount Stock Plan 3 | .7 |  |  | — |  |  | .8 |  |  | — |  |  | .9 |  |  | — |
Performance Stock Unit (PSU) awards: 4 |  |  |  |  |  |  |  |  |  |  |
2023 PSU awards 4A | 1.3 |  |  | 1.1 |  |  | — |  |  | — |  |  | — |  |  | — |
2022 and prior PSU awards 4B | 1.3 |  |  | (.5) |  |  | .8 |  |  | (2.5) |  |  | 7.8 |  |  | 4.0 |
Restricted Stock Unit (RSU) awards 5 | 8.8 |  |  | — |  |  | 10.2 |  |  | — |  |  | 8.2 |  |  | — |
Other, primarily non-employee directors restricted stock | .8 |  |  | — |  |  | 1.0 |  |  | — |  |  | .4 |  |  | — |
Total stock-related compensation expense (income) | 18.6 |  |  | $ | 1.3 |  |  | 19.5 |  |  | $ | (1.8) |  |  | 23.9 |  |  | $ | 4.6 |
Employee contributions for above stock plans | 9.0 |  |  |  |  | 10.6 |  |  |  |  | 10.3 |  |  |
Total stock-based compensation | $ | 27.6 |  |  |  |  | $ | 30.1 |  |  |  |  | $ | 34.2 |  |  |
Tax benefits on stock-based compensation expense | $ | 4.5 |  |  |  |  | $ | 4.7 |  |  |  |  | $ | 5.8 |  |  |
Tax benefits on stock-based compensation payments | .4 |  |  |  |  | .6 |  |  |  |  | 3.4 |  |  |
Total tax benefits associated with stock-based compensation | $ | 4.9 |  |  |  |  | $ | 5.3 |  |  |  |  | $ | 9.2 |  |  |
The following table recaps the impact of stock-based compensation on assets and liabilities for each of the periods presented:
| 2023 |  | 2022
| Current |  | Long-term |  | Total |  | Current |  | Long-term |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |
Diversified investments associated with the ESU program 1 | $ | 3.6 |  |  | $ | 46.8 |  |  | $ | 50.4 |  |  | $ | 3.1 |  |  | $ | 39.7 |  |  | $ | 42.8 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
ESU program 1 | $ | 3.7 |  |  | $ | 48.7 |  |  | $ | 52.4 |  |  | $ | 3.1 |  |  | $ | 40.9 |  |  | $ | 44.0 |
PSU awards 4 | .1 |  |  | 1.8 |  |  | 1.9 |  |  | — |  |  | 1.3 |  |  | 1.3 |
Other - primarily timing differences between employee withholdings and related employer contributions to be submitted to various plans' trust accounts | 5.5 |  |  | — |  |  | 5.5 |  |  | 5.9 |  |  | — |  |  | 5.9 |
Total liabilities associated with stock-based compensation | $ | 9.3 |  |  | $ | 50.5 |  |  | $ | 59.8 |  |  | $ | 9.0 |  |  | $ | 42.2 |  |  | $ | 51.2 |
ESU Program The ESU program is a stock-based retirement plan for highly compensated employees. We make a matching contribution of 50% and will make another matching contribution of up to 50% of the employee’s contributions for the year if certain profitability levels, as defined in the ESU program, are obtained. Participants in the ESU program may contribute up to 10% (depending upon certain qualifications) of their compensation above the threshold. Participant contributions are credited to a diversified investment account established for the participant, and we make premium contributions to the diversified investment accounts equal to 17.65% of the participant’s contribution. A participant’s diversified investment account balance is adjusted to mirror the investment experience, whether positive or negative, of the diversified investments selected by the participant. Participants may change investment elections in the diversified investment accounts, but cannot purchase Company common stock or stock units. The diversified investment accounts consist of various mutual funds and retirement target funds and are unfunded, unsecured obligations of the Company that will be settled in cash. Both the assets and liabilities associated with this program are presented in the table above and are adjusted to fair value at each reporting period. Company matching contributions to the ESU program, including dividend equivalents, are used to acquire stock units at 85% of the common stock market price on the acquisition date. Stock units are converted to common stock at a 1-to-1 ratio upon distribution from the program and may be settled in cash, except for distributions to the Company's Section 16 Officers. Company matches in the ESU program fully vest upon five years of cumulative service, subject to certain participation requirements. Distributions are triggered by an employee’s retirement, death, disability, or separation from Leggett. In 2023, employee contributions were $3.9, and employer premium contributions to diversified investment accounts were $.7. See the stock-based compensation table above for information regarding employer contributions. Details regarding stock unit activity for the ESU program are reflected in the stock units summary table below. Deferred Compensation Program We offer a Deferred Compensation Program under which key managers and outside directors may elect to receive stock options, stock units, or interest-bearing cash deferrals in lieu of cash compensation: •Stock options under this program are granted in the last month of the year prior to the year the compensation is earned. The number of options granted equals the deferred compensation times five, divided by the stock’s market price on the date of grant. The option has a 10-year term. It vests as the associated compensation is earned and becomes exercisable beginning 15 months after the grant date. Stock is issued when the option is exercised. Grant date fair values are calculated using the Black-Scholes option pricing model and are amortized by the straight-line method over the options’ total vesting period, except for employees who are retirement eligible. Expense for employees who are retirement eligible is recognized immediately. Stock option activity for the years presented was not material. •Deferred stock units (DSU) under this program are acquired every two weeks (when the compensation would have otherwise been paid) at a 20% discount to the market price of our common stock on each acquisition date, and they vest immediately. Expense is recorded as the compensation is earned. Stock units earn dividends at the same rate as cash dividends paid on our common stock. These dividends are used to acquire stock units at a 20% discount. Stock units are converted to common stock and distributed in accordance with the participant’s pre-set election. However, stock units may be settled in cash, but only if there is not a sufficient amount of shares reserved for future issuance under the Flexible Stock Plan. Participants must begin receiving distributions no later than 10 years after the effective date of the deferral, and installment distributions cannot exceed 10 years. •Interest-bearing cash deferrals under this program are reported in "Other long-term liabilities" on the Consolidated Balance Sheets and are disclosed in Note H.
| Options |  | Units |  | Cash
Aggregate amount of compensation deferred during 2023 | $ | .1 |  |  | $ | 4.3 |  |  | $ | .6 |
Discount Stock Plan Under the Discount Stock Plan (DSP), a tax-qualified §423 stock purchase plan, eligible employees may purchase shares of Leggett common stock at 85% of the closing market price on the last business day of each month. Shares are purchased and issued on the last business day of each month and generally cannot be sold or transferred for one year.
Average 2023 purchase price per share (net of discount) | $ | 25.37 |
2023 number of shares purchased by employees | .2 |
Shares purchased since inception in 1982 | 24.0 |
Maximum shares under the plan | 27.0 |
PSU Awards Our long-term incentive awards are split between PSUs and RSUs. Beginning in 2023, executive officers received 60% PSUs and 40% RSUs. Prior to 2023, executive officers received two thirds PSUs and one third RSUs. For other selected participants, the award is granted at either half PSUs and half RSUs or 100% RSUs. We intend to pay 50% in shares of our common stock and 50% in cash, although we reserve the right (subject to the Human Resources and Compensation (HRC) Committee's approval) to pay up to 100% in cash. Cash settlements are recorded as a liability and adjusted to fair value at each reporting period. 4A 2023 PSU Awards In March 2023, the HRC Committee amended the PSU award agreement. Following the amendment, the 2023 awards are based on two performance conditions as detailed below. The base payout percentage will be determined by the level of achievement of these performance conditions, and then adjusted by a payout multiplier based on our Total Shareholder Return (TSR) compared to a peer group. Participants will earn from 0% to 200% of the base award. Grant date fair values are calculated based on the grant date stock price and a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies for the payout multiplier. Expense is adjusted every quarter over the three-year vesting period based on the number of shares expected to vest. The PSU awards contain the following conditions: •A service requirement—Awards generally "cliff" vest three years following the grant date. •Two performance conditions over the three-year performance period: ◦50% of the awards are based on Return on Invested Capital (ROIC). ROIC is calculated as our average annual net operating profit after tax divided by our average invested capital. ◦50% of the awards are based on achieving specified Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) performance targets. •A market condition—The payout multiplier is based upon our relative TSR compared to a group of peer companies during the three-year performance period. The peer group consists of all the companies in the Industrial, Materials, and Consumer Discretionary sectors of the S&P 500 and S&P Midcap 400 (approximately 300 companies). The multiplier will increase or decrease the payout by up to 25%, not to exceed the maximum 200% payout, and may not increase the payout above 100% if our TSR is negative. 4B 2022 and Prior PSU Awards TSR Based Previous to 2023, PSU awards were based 50% upon our TSR compared to a peer group. A small number of PSU awards were based 100% upon relative TSR for certain business unit employees to complement their particular mix of incentive compensation. Grant date fair values were calculated using a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies. Grant date fair values are amortized using the straight-line method over the three-year vesting period. The relative TSR component of the PSU awards contained the following conditions: •A service requirement—Awards generally “cliff” vest three years following the grant date. •A market condition—Awards are based on our TSR compared to the same peer group as noted above. Participants will earn from 0% to 200% of the base award depending upon how our TSR ranks within the peer group at the end of the three-year performance period. EBIT CAGR Based Previous to 2023, PSU awards were based 50% upon our, or the applicable profit center's, EBIT CAGR. Grant date fair values were calculated using the grant date stock price discounted for dividends over the vesting period. Expense is adjusted every quarter over the three-year vesting period based on the number of shares expected to vest. The EBIT CAGR component of the PSU awards contained the following conditions: •A service requirement—Awards generally “cliff” vest three years following the grant date. •A performance condition—Awards are based on achieving specified EBIT CAGR targets for our, or the applicable profit center's, EBIT during the third year of the period compared to EBIT during the fiscal year immediately preceding the period. Participants will earn from 0% to 200% of the base award. Below is a summary of shares and grant date fair value related to PSU awards for the periods presented:
| Year Ended December 31
| 2023 |  | 2022 |  | 2021
2023 awards and prior year TSR Based awards |  |  |  |  |
Total shares base award | .1 |  |  | .1 |  |  | .1 |
Grant date per share fair value | $ | 29.31 |  |  | $ | 41.13 |  |  | $ | 49.43 |
Risk-free interest rate | 4.4 | % |  | 1.7 | % |  | .2 | %
Vesting period in years | 3.0 |  | 3.0 |  | 3.0
Expected volatility | 45.7 | % |  | 45.2 | % |  | 44.3 | %
Expected dividend yield | 5.5 | % |  | 4.6 | % |  | 3.7 | %
Prior year EBIT CAGR Based awards |  |  |  |  |
Total shares base award | — |  |  | .1 |  |  | .1 |
Grant date per share fair value | $ | — |  |  | $ | 32.88 |  |  | $ | 38.77 |
Vesting period in years | 0.0 |  | 3.0 |  | 3.0
Three-Year Performance Cycle for PSU - EBIT CAGR Based
Award Year |  | Completion Date |  |  | Payout as a Percent of the Base Award |  | Number of Shares Distributed |  | Cash Portion |  | Distribution Date
2019 |  | December 31, 2021 |  |  | 127.0% |  | <.1 million |  | $ | 3.5 |  |  | First quarter 2022
2020 |  | December 31, 2022 |  |  | —% |  | — million |  | $ | — |  |  | First quarter 2023
2021 |  | December 31, 2023 |  |  | 6.0% |  | <.1 million |  | $ | .1 |  |  | First quarter 2024
There were no stock or cash distributions in the PSU - TSR Based awards in the years presented as our TSR performance relative to the peer group was below the payout criteria for the 2019 - 2021 award years (for which the three-year performance periods ended December 31, 2021, 2022, and 2023). 5 Restricted Stock Unit Awards RSU awards are generally granted as follows: •As part of our long-term incentive awards, along with PSUs as discussed above •As annual awards to selected managers •On a discretionary basis to selected employees •As compensation for outside directors The value of these awards is determined by the stock price on the day of the award, and expense is recognized over the three-year vesting period, except for retirement-eligible employees that are expensed immediately at the RSU grant date or as they become retirement eligible. Those who are retirement eligible (after age 65 or after the date where the participant’s age plus years of service is greater than or equal to 70 years) will continue to receive shares that will vest after the retirement date. Stock Units Summary As of December 31, 2023, the unrecognized cost of non-vested stock units that is not adjusted to fair value was $7.4 with a weighted-average remaining contractual life of one year. Stock unit information for the plans discussed above is presented in the table below:
| DSU |  | ESU |  | PSU |  | RSU |  |  |  | Total Units |  | Weighted Average Grant Date Fair Value per Unit |  | Aggregate Intrinsic Value
Unvested at December 31, 2022 | — |  |  | — |  |  | .8 |  |  | .2 |  |  |  |  | 1.0 |  |  | $ | 42.34 |  |  |
Granted based on current service | .2 |  |  | .3 |  |  | — |  |  | .4 |  |  |  |  | .9 |  |  | 29.74 |  |  |
Granted based on future conditions* | — |  |  | — |  |  | .3 |  |  | — |  |  |  |  | .3 |  |  | 14.66 |  |  |
Vested | (.2) |  |  | (.3) |  |  | — |  |  | (.3) |  |  |  |  | (.8) |  |  | 30.39 |  |  |
Forfeited* | — |  |  | — |  |  | (.3) |  |  | (.1) |  |  |  |  | (.4) |  |  | 23.95 |  |  |
Unvested at December 31, 2023 | — |  |  | — |  |  | .8 |  |  | .2 |  |  |  |  | 1.0 |  |  | $ | 42.38 |  |  | $ | 25.5 |
Fully vested shares available for issuance at December 31, 2023 |  |  |  |  |  |  |  |  |  |  | 3.5 |  |  |  |  | $ | 92.3 |
*PSU awards are presented at maximum payout of 200% at grant date and when forfeited.
| Year Ended December 31
| 2023 |  | 2022 |  | 2021
Total intrinsic value of vested stock units converted to common stock | $ | 1.9 |  |  | $ | 5.7 |  |  | $ | 10.5 |

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