Black & Decker 2011 Annual Report Download - page 88

76
Employee Stock Purchase Plan: The Employee Stock Purchase Plan (“ESPP”) enables eligible employees in the United States and
Canada to subscribe at any time to purchase shares of common stock on a monthly basis at the lower of 85% of the fair market value
of the shares on the grant date ($53.00 per share for fiscal year 2011 purchases) or 85% of the fair market value of the shares on the
last business day of each month. A maximum of 6,000,000 shares are authorized for subscription. During 2011, 2010 and 2009 shares
totaling 147,776 shares, 143,624 shares and 115,776 shares respectively, were issued under the plan at average prices of $49.63,
$37.53, and $27.87 per share, respectively and the intrinsic value of the ESPP purchases was $2.6 million, $3.1 million and
$1.8 million respectively. For 2011, the Company received $7.8 million in cash from ESPP purchases, and there is no related tax
benefit. The fair value of ESPP shares was estimated using the Black-Scholes option pricing model. ESPP compensation cost is
recognized ratably over the one-year term based on actual employee stock purchases under the plan. The fair value of the employees’
purchase rights under the ESPP was estimated using the following assumptions for 2011, 2010 and 2009, respectively: dividend yield
of 2.1%, 2.5% and 2.9%; expected volatility of 30.0%, 38.0% and 56.0%; risk-free interest rates of 0.2%, 0.1% and 0.2%; and
expected lives of one year. The weighted average fair value of those purchase rights granted in 2011, 2010 and 2009 was $21.0, $20.8
and $10.8, respectively. Total compensation expense recognized for ESPP amounted to $2.9 million, $3.5 million and $1.2 million for
2011, 2010 and 2009, respectively.
Restricted Share Units and Awards: Compensation cost for restricted share units and awards, including restricted shares granted to
French employees in lieu of RSU’s, (collectively “RSU’s”) granted to employees is recognized ratably over the vesting term, which
varies but is generally 4 years. RSU grants totaled 413,330 shares, 1,532,107 shares and 452,613 shares in 2011, 2010 and 2009,
respectively. The weighted-average grant date fair value of RSU’s granted in 2011, 2010 and 2009 was $65.20, $59.32 and $37.55 per
share, respectively. Additionally, the Company assumed 0.4 million restricted stock units and awards as part of the Merger in March
of 2010. These restricted stock units and awards had a fair value of $57.86 per share or $25.0 million in total, with $12.2 million
recorded as consideration paid and $12.8 million recognized as future compensation cost.
Total compensation expense recognized for RSU’s amounted to $33.3 million, $52.7 million and $9.4 million, in 2011, 2010 and 2009
respectively. The actual tax benefit received in the period the shares were delivered was $3.8 million, $0.3 million and $0.1 million in
2011, 2010 and 2009, respectively. As of December 31, 2011, unrecognized compensation expense for RSU’s amounted to
$62.7 million and this cost will be recognized over a weighted-average period of 4.2 years.
A summary of non-vested restricted stock unit and award activity as of December 31, 2011, and changes during the twelve month
period then ended is as follows:
Restricted Share
Units & Awards
Weighted
Average
Grant
Date Fair Value
Non
-vested at January 1, 2011
.............................
2,470,723
$ 53.60
Granted ................................
................................
413,330
65.20
Vested ................................
................................
(467,771)
70.22
Forfeited ................................
...............................
(43,174)
70.98
Non
-vested at December 31, 2011
.......................
2,373,108
$ 57.52
The total fair value of shares vested (market value on the date vested) during 2011, 2010 and 2009 was $32.8 million, $14.9 million
and $7.2 million, respectively.
Non-employee members of the Board of Directors received restricted share-based grants which must be cash settled and accordingly
mark-to-market accounting is applied. Additionally, the Board of Directors were granted restricted share units for which compensation
expense of $1.1 million, $0.9 million and $0.6 million was recognized for 2011, 2010 and 2009, respectively.
Long-Term Performance Awards: The Company has granted Long Term Performance Awards (“LTIPs”) under its 1997, 2001 and
2009 Long Term Incentive Plans to senior management employees for achieving Company performance measures. Awards are
payable in shares of common stock, which may be restricted if the employee has not achieved certain stock ownership levels, and
generally no award is made if the employee terminates employment prior to the payout date.
Long-Term Performance Awards: LTIP grants were made in 2009, 2010 and 2011. Each grant has separate annual performance goals
for each year within the respective three year performance period. Earnings per share and return on capital employed represent 75% of
the share payout of each grant. There is a third market-based element, representing 25% of the total grant, which measures the
Company’s common stock return relative to peers over the performance period. The ultimate delivery of shares will occur in 2012,
2013 and 2014 for the 2009, 2010 and 2011 grants, respectively. Total payouts are based on actual performance in relation to these
goals.