Assurant 2014 Annual Report Download - page 133

ASSURANT, INC. – 2014 Form 10-K F-45
17 Stock Based Compensation
16. Common Stock
Changes in the number of common stock shares outstanding are as follows:
December 31,
2014 2013 2012
Shares outstanding, beginning 71,828,208 78,664,029 88,524,374
Vested restricted stock and restricted stock units, net(a) 321,841 340,525 370,244
Issuance related to performance share units 277,164 252,025 403,519
Issuance related to ESPP 141,576 217,573 213,942
Issuance related to SARS exercise 29,260 61,070 51,410
Shares repurchased (3,298,490) (7,707,014) (10,899,460)
SHARES OUTSTANDING, ENDING 69,299,559 71,828,208 78,664,029
(a) Vested restricted stock and restricted stock units shown net of shares retired to cover participant tax liability.
The Company is authorized to issue 800,000,000 shares of common stock. In addition, 150,001 shares of Class B and 400,001 shares of
Class C common stock, per the Restated Certifi cate of Incorporation of Assurant, Inc., are still authorized but have not been issued.
17. Stock Based Compensation
In accordance with the guidance on share based compensation,
the Company recognized stock-based compensation costs based
on the grant date fair value. The Company also applied the
“long form” method to calculate its beginning pool of windfall
tax benefi ts related to employee stock-based compensation
awards as of the adoption date of the guidance. For the years
ended December 31, 2014, 2013 and 2012, the Company
recognized compensation costs net of a 5% per year forfeiture
rate on a pro-rated basis over the remaining vesting period.
Long-Term Equity Incentive Plan
Under the Assurant, Inc. Long-Term Equity Incentive Plan
(“ALTEIP”), amended and restated in May 2010, the Company
is authorized to issue up to 5,300,000 new shares of the
Company’s common stock to employees, offi cers and non-
employee directors. Under the ALTEIP, the Company may grant
awards based on shares of its common stock, including stock
options, stock appreciation rights (“SARs”), restricted stock
(including performance shares), unrestricted stock, restricted
stock units (“RSUs”), performance share units (“PSUs”) and
dividend equivalents. All future share-based grants will be
awarded under the ALTEIP.
The Compensation Committee of the Board of Directors (the
“Compensation Committee”) awards PSUs and RSUs annually.
RSUs and PSUs are promises to issue actual shares of common
stock at the end of a vesting period or performance period.
The RSUs granted to employees under the ALTEIP are based
on salary grade and performance and vest one-third each
year over a three-year period. RSUs granted to non-employee
directors also vest one-third each year over a three-year period,
however, issuance of vested shares is deferred until separation
from Board service. RSUs receive dividend equivalents in cash
during the restricted period and do not have voting rights
during the restricted period. PSUs accrue dividend equivalents
during the performance period based on a target payout, and
will be paid in cash at the end of the performance period
based on the actual number of shares issued. The fair value
of RSUs is estimated using the fair market value of a share of
the Company’s common stock at the date of grant. The fair
value of PSUs is estimated using the Monte Carlo simulation
model and is described in further detail below.
For the PSU portion of an award, the number of shares a
participant will receive upon vesting is contingent upon the
Company’s performance with respect to selected metrics,
identifi ed below, compared against a broad index of insurance
companies and assigned a percentile ranking. These rankings
are then averaged to determine the composite percentile
ranking for the performance period. The payout levels can vary
between 0% and 150% (maximum) of the target (100%) ALTEIP
award amount based on the Company’s level of performance
against the selected metrics.
PSU Performance Goals. The Compensation Committee
established book value per share (“BVPS”) growth excluding
AOCI, revenue growth and total stockholder return as the
three performance measures for PSU awards. BVPS growth
is defi ned as the year-over-year growth of the Company’s
stockholders’ equity excluding AOCI divided by the number
of fully diluted total shares outstanding at the end of the
period. Revenue growth is defi ned as the year-over-year
change in total revenues as disclosed in the Company’s
annual statement of operations. Total stockholder return is
defi ned as appreciation in Company stock plus dividend yield
to stockholders. Payouts will be determined by measuring
performance against the average performance of companies
included in an insurance industry market index.
Since 2009, the Company has used the A.M. Best U.S. Insurance
Index to measure its relative performance ranking. In 2014,
A.M. Best stopped publishing this index. As of January 1, 2014,
the Company is using the S&P Total Market Index to measure
the Company’s performance for all new and outstanding PSU
awards. Consistent with adjustments made to the A.M. Best
U.S. Insurance Index, adjustments will be made to the S&P
Total Market Index to exclude companies with revenues of less