Citrix 2014 Annual Report Download - page 91

CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-23
Non-vested Stock Units
Market Performance and Service Condition Stock Units
In March 2014, 2013 and 2012, the Company granted senior level employees non-vested stock unit awards representing,
in the aggregate, 378,022, 399,029 and 418,809 non-vested stock units, respectively, that vest based on certain target market
performance and service conditions. The number of non-vested stock units underlying each award will be determined within
sixty days of the calendar year following the end of a three-year performance period ending December 31, 2016 for the March
2014 awards, December 31, 2015 for the March 2013 awards and December 31, 2014 for the March 2012 awards. The
attainment level under the award will be based on the Company's total return to stockholders over the performance period
compared to the return on the Nasdaq Composite Total Return Index (the "XCMP"). If the Company's return is positive and
meets or exceeds the indexed return, the number of non-vested stock units issued will be based on interpolation, with the
maximum number of non-vested stock units issuable pursuant to the award capped at 200% of the target number of non-vested
stock units set forth in the award agreement if the Company's return exceeds the indexed return by 40% or more. If the
Company's return over the performance period is positive but underperforms the index, a number of non-vested stock units will
be issued, below the target award, based on interpolation; however, no non-vested stock units will be issued if the Company's
return underperforms the index by more than 20% over the performance period. In the event the Company's return to
stockholders is negative but still meets or exceeds the indexed return, only 75% of the target award shall be issued. If the
awardee is not employed by the Company at the end of the performance period; the extent to which the awardee will vest in the
award, if at all, is dependent upon the timing and character of the termination as provided in the award agreement. Each non-
vested stock unit, upon vesting, represents the right to receive one share of the Company's common stock.
The market condition requirements are reflected in the grant date fair value of the award, and the compensation expense
for the award will be recognized assuming that the requisite service is rendered regardless of whether the market conditions are
achieved. The grant date fair value of the non-vested performance stock unit awards was determined through the use of a
Monte Carlo simulation model, which utilized multiple input variables that determined the probability of satisfying the market
condition requirements applicable to each award as follows:
March 2014 Grant March 2013 Grant March 2012 Grant
Expected volatility factor 0.19 - 0.38 0.16 - 0.42 0.21 - 0.39
Risk free interest rate 0.81% 0.33% 0.47%
Expected dividend yield 0% 0% 0%
The range of expected volatilities utilized was based on the historical volatilities of the Company's common stock and
the XCMP. The Company chose to use historical volatility to value these awards because historical stock prices were used to
develop the correlation coefficients between the Company and the XCMP in order to model the stock price movements. The
volatilities used were calculated over the most recent 2.76 year period, which was the remaining term of the performance
period at the date of grant. The risk free interest rate was based on the implied yield available on U.S. Treasury zero-coupon
issues with remaining terms equivalent to the remaining performance period. The Company does not intend to pay dividends on
its common stock in the foreseeable future. Accordingly, the Company used a dividend yield of zero in its model. The estimated
fair value of each award as of the date of grant was $56.94 for the March 2014 grant, $89.93 for the March 2013 grant and
$89.95 for the March 2012 grant. The performance metrics under the March 2012 grant were not met and therefore no stock
units will be issued under this grant.
Service Based Stock Units
The Company also awards senior level and certain other employees non-vested stock units granted under the 2014 Plan
that vest based on service. The majority of these non-vested stock unit awards vest 33.33% on each anniversary subsequent to
the date of the award. The remaining awards vest 100% on the third anniversary of the grant date. The Company also assumes
non-vested stock units in connection with certain of its acquisitions. The assumed awards have the same three year vesting
schedule. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company’s common stock.
In addition, the Company awards non-vested stock units to all of its non-employee directors. These awards vest monthly in 12
equal installments based on service and, upon vesting, each stock unit represents the right to receive one share of the
Company's common stock.