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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-Based Compensation | 9. Share-Based Compensation The Company has four share-based compensation plans: the Amended and Restated Herbalife Ltd. 2005 Stock Incentive Plan, or the 2005 Stock Incentive Plan, the Amended and Restated Herbalife Ltd. 2014 Stock Incentive Plan, or the 2014 Stock Incentive Plan, the Amended and Restated Herbalife Ltd. Independent Directors Deferred Compensation and Stock Unit Plan, or the Independent Director Stock Unit Plan, and the Amended and Restated Non-Management Directors Compensation Plan, or the Non-Management Directors Plan. The 2014 Stock Incentive Plan replaced the 2005 Stock Incentive Plan and after the adoption thereof, no additional awards were made under the 2005 Stock Incentive Plan. The terms of the 2014 Stock Incentive Plan are substantially similar to the terms of the 2005 Stock Incentive Plan. The 2014 Stock Incentive Plan authorizes the issuance of 8,700,000 common shares pursuant to awards granted under the plan, plus any shares that remained available for issuance under the 2005 Stock Incentive Plan as of April 29, 2014. The purpose of the Independent Directors Stock Unit Plan and the Non-Management Directors Plan is to facilitate equity ownership in the Company by its directors through equity awards. At December 31, 2016, an aggregate of approximately 5.5 million common shares remain available for future issuance under the 2014 Stock Incentive Plan. The Company’s share-based compensation plans provide for grants of stock options, stock appreciation rights, or SARs, and stock units, which are collectively referred to herein as awards. Previously, stock options generally vested quarterly over a five-year period or less, beginning on the grant date. Certain SARs vest quarterly over a five-year period beginning on the grant date. Other SARs vest annually over a three-year period. The contractual term of service condition stock options and SARs is generally ten years. Stock unit awards under the 2014 Stock Incentive Plan, or Incentive Plan Stock Units, vest annually over a three year period. Stock units awarded to directors generally vest over a one year period. Awards can be subject to the following: market and service conditions, or market condition awards; performance and service conditions, or performance condition awards; market, service and performance conditions, or market and performance condition awards; or be subject only to continued service with the Company, or service condition awards. All awards granted by the Company are market condition awards, performance condition awards, market and performance condition awards, or service condition awards. Unless otherwise determined at the time of grant, the value of each stock unit shall be equal to one common share of Herbalife. The Company’s stock compensation awards outstanding as of December 31, 2016 include SARs and stock units. In August 2011, the Company granted SARs with market and performance conditions to its Chairman and Chief Executive Officer. These awards were to vest on December 31, 2014, subject to his continued employment through that date, the Company’s stock price appreciating and exceeding a targeted price, and the Company’s achievement of certain Volume Point performance targets. The fair value of these SARs was determined on the date of the grant using the Monte Carlo lattice model. At the end of December 31, 2014, the Chairman and Chief Executive Office remained an employee of the Company and the Company met the specified Volume Point performance targets. As the requisite service and performance conditions were met, the impact of the share-based compensation expense recorded in connection with these SARs remained in the Company’s consolidated financial statements. However, as the price of the Company’s common shares did not exceed the target price, the applicable SARs did not vest and are no longer considered outstanding. During the years ended December 31, 2016, 2015 and 2014, the Company granted SARs with performance conditions to certain employees. These awards vest 20% in the first succeeding year, 20% in the second succeeding year, and 60% in the third succeeding year, subject to achievement of certain sales leader retention metrics. The fair value of these SARs was determined on the date of grant using the Black-Scholes-Merton option pricing model. The compensation expense for these grants is recognized over the vesting term using the graded vesting method. During the years ended December 31, 2016, 2015, and 2014, the Company granted SARs with service conditions to certain employees. The fair value of these SARs was determined on the date of grant using the Black-Scholes-Merton option pricing model. The compensation expense for these grants is recognized over the vesting term using the straight line method. Stock-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of income. For the years ended December 31, 2016, 2015, and 2014, share-based compensation expense relating to service condition awards amounted to $23.9 million, $26.8 million, and $27.9 million, respectively. For the years ended December 31, 2016 and 2015, share-based compensation expense relating to market condition awards amounted to $0.4 million and $0.3 million, respectively. No share-based compensation expense relating to market condition awards was recognized in the year ended December 31, 2014. For the years ended December 31, 2016, 2015 and 2014, share-based compensation expense relating to performance condition awards amounted to $15.9 million, $17.8 million, and $13.3 million, respectively. No share-based compensation expense related to market and performance condition awards was recognized in the years ended December 31, 2016 and 2015. For the year ended December 31, 2014, share-based compensation expense relating to market and performance condition awards amounted to $4.5 million. For the years ended December 31, 2016, 2015, and 2014, the related income tax benefits recognized in earnings for all awards amounted to $14.8 million, $16.6 million, and $16.6 million, respectively. As of December 31, 2016, the total unrecognized compensation cost related to non-vested service condition stock awards was $31.0 million and the related weighted-average period over which it is expected to be recognized is approximately 1.8 years. As of December 31, 2016, the total unrecognized compensation cost related to non-vested performance condition awards was $17.1 million and the related weighted-average period over which it is expected to be recognized is approximately 1.6 years. As of December 31, 2016, the total unrecognized compensation cost related to non-vested market condition stock awards was $0.5 million and the related weighted-average period over which it is expected to be recognized is approximately 1.2 years. Stock units are valued at the market value on the date of grant. The fair value of service condition SARs and performance condition SARs are estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The fair value of SARs with market conditions or with market and performance conditions are estimated on the date of grant using the Monte Carlo lattice model. The Company calculates the expected term of its SARs based on historical data. All groups of employees have been determined to have similar historical exercise patterns for valuation purposes. The expected volatility of the SARs are based upon the historical volatility of the Company’s common shares and it is also validated against the volatility rates of a peer group of companies. The risk free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the SARs. The expected dividend yield assumption is based on the Company’s historical and expected amount of dividend payouts. There were no stock options granted during the years ended December 31, 2016, 2015, and 2014. There were no SARs granted to independent directors during the years ended December 31, 2016, 2015 and 2014. The following table summarizes the weighted average assumptions used in the calculation of the fair value for service condition awards for the years ended December 31, 2016, 2015, and 2014:
|  | SARs |  |
|  | Year Ended December 31, |  |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |
Expected volatility |  |  | 49.6 | % |  |  | 48.7 | % |  |  | 51.5 | % |
Dividends yield |  |  | 0.1 | % |  |  | 1.6 | % |  |  | 1.3 | % |
Expected term |  | 6.0 years |  |  | 5.8 years |  |  | 5.6 years |  |
Risk-free interest rate |  |  | 1.2 | % |  |  | 1.6 | % |  |  | 1.7 | % |
The following table summarizes the weighted average assumptions used in the calculation of the fair value for performance condition awards granted during the years ended December 31, 2016, 2015 and 2014:
|  | SARs |
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Expected volatility |  |  | 49.6 | % |  |  | 48.8 | % |  |  | 52.0 | %
Dividends yield |  |  | 0.0 | % |  |  | 1.6 | % |  |  | 1.3 | %
Expected term |  | 6.0 years |  |  | 5.8 years |  |  | 5.6 years |
Risk-free interest rate |  |  | 1.2 | % |  |  | 1.6 | % |  |  | 1.7 | %
The following tables summarize the activity under all share-based compensation plans, which includes all stock awards, for the year ended December 31, 2016:
Stock Options & SARs |  | Awards |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value(1) |
|  | (In thousands) |  |  |  |  |  |  |  |  | (In millions) |
Outstanding at December 31, 2015(2) (3) |  |  | 12,076 |  |  | $ | 38.70 |  |  | 6.6 years |  | $ | 216.4 |
Granted |  |  | 1,400 |  |  | $ | 62.21 |  |  |  |  |  |  |
Exercised |  |  | (1,126 | ) |  | $ | 33.63 |  |  |  |  |  |  |
Forfeited |  |  | (352 | ) |  | $ | 52.29 |  |  |  |  |  |  |
Outstanding at December 31, 2016(2) (3) |  |  | 11,998 |  |  | $ | 41.52 |  |  | 6.0 years |  | $ | 148.7 |
Exercisable at December 31, 2016(4) |  |  | 7,136 |  |  | $ | 38.80 |  |  | 4.5 years |  | $ | 106.8 |
(1) | The intrinsic value is the amount by which the current market value of the underlying stock exceeds the exercise price of the stock award.
(2) | Includes 0.1 million and 0.1 million market condition SARS as of December 31, 2016 and 2015, respectively.
(3) | Includes 2.9 million and 2.5 million performance condition SARs as of December 31, 2016 and 2015, respectively.
(4) | Includes 0.9 million performance condition SARs.
The weighted-average grant date fair value of service condition SARs granted during the years ended December 31, 2016, 2015, and 2014 was $29.33, $12.57, and $25.24, respectively. The weighted-average grant date fair value of SARs with performance conditions granted during the years ended December 31, 2016, 2015 and 2014 was $29.69, $13.65, and $25.98, respectively. The weighted-average grant date fair value of SARs with market conditions granted during the year ended December 31, 2015 was $9.87. The total intrinsic value of service condition stock options and SARs exercised during the years ended December 31, 2016, 2015, and 2014 was $32.3 million, $25.5 million, and $63.6 million, respectively. The total intrinsic value of performance condition SARs exercised during the year ended December 31, 2016 was $0.7 million. The total intrinsic value of market condition SARS exercised during the year ended December 31, 2015 was $11.4 million. There were no market condition SARS exercised during the years ended December 31, 2016 and 2014. The following table summarizes the activities for stock units, primarily relating to directors of the Company, for the year ended December 31, 2016:
Incentive Plan and Independent Directors Stock Units |  | Shares |  |  | Weighted Average Grant Date Fair Value |
|  | (In thousands) |  |  |  |  |
Outstanding and nonvested at December 31, 2015 |  |  | 34 |  |  | $ | 51.08 |
Granted |  |  | 27 |  |  | $ | 62.30 |
Vested |  |  | (35 | ) |  | $ | 51.37 |
Forfeited |  | — |  |  |  |  |
Outstanding and nonvested at December 31, 2016 |  |  | 26 |  |  | $ | 62.35 |
The total vesting date fair value of stock units which vested during the years ended December 31, 2016, 2015, and 2014 was $2.1 million, $1.3 million, and $9.0 million, respectively. Employee Stock Purchase Plan During 2007, the Company adopted a qualified employee stock purchase plan, or ESPP, which was implemented during the first quarter of 2008. In connection with the adoption of the ESPP, the Company has reserved for issuance a total of 2 million common shares. At December 31, 2016, approximately 1.7 million common shares remain available for future issuance. Under the terms of the ESPP, rights to purchase common shares may be granted to eligible qualified employees subject to certain restrictions. The ESPP enables the Company’s eligible employees, through payroll withholdings, to purchase a limited number of common shares at 85% of the fair market value of a common share at the purchase date. Purchases are made on a quarterly basis.

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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 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: 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=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: 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 5: 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 6: 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 + Details
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