DELPHI 2013 Annual Report Download - page 131

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(1) Average return on net assets is measured by tax-affected operating income divided by average net working capital plus average net property, plant and
equipment for each calendar year during the respective performance period.
(2) Cumulative earnings per share is measured by net income attributable to Delphi divided by the weighted average number of diluted shares outstanding for
the respective three-year performance period.
(3) Relative total shareholder return is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading
days in the fourth quarter of the end of the performance period to the average closing price per share of the Company’s ordinary shares for all available
trading days in the fourth quarter of the year preceding the grant, including dividends, and assessed against a comparable measure of competitor and peer
group companies.
The grant date fair value of the RSUs was determined based on the closing price of the Company’s ordinary shares on the
date of the grant of the award, including an estimate for forfeitures, and a contemporaneous valuation performed by an
independent valuation specialist with respect to the relative total shareholder return awards. Based on the target number of
awards issued for the February 2013 and 2012 grants, the fair value at grant date was estimated to be approximately $60
million and $59 million, respectively.
A summary of activity, including award grants, vesting and forfeitures is provided below:
RSUs Weighted Average Grant Date Fair Value
(in thousands)
Outstanding, January 1, 2012 ......................................................................... 51 19.90
Granted....................................................................................................... 1,953 31.08
Vested......................................................................................................... (51) 19.90
Forfeited..................................................................................................... (54) 30.81
Outstanding, December 31, 2012 ................................................................... 1,899 31.09
Granted....................................................................................................... 1,526 41.72
Vested......................................................................................................... (285) 29.26
Forfeited..................................................................................................... (222) 34.55
Outstanding, December 31, 2013 ................................................................... 2,918 36.55
Delphi recognized compensation expense of $46 million ($35 million, net of tax) and $20 million ($15 million, net of
tax) based on the Company’s best estimate of ultimate performance against the respective targets during the years ended
December 31, 2013 and 2012, respectively. Delphi will continue to recognize compensation expense, based on the grant date
fair value of the awards applied to the Company’s best estimate of ultimate performance against the respective targets, over the
requisite vesting periods of the awards. Based on the grant date fair value of the awards and the Company’s best estimate of
ultimate performance against the respective targets as of December 31, 2013, unrecognized compensation expense on a pretax
basis of approximately $62 million is anticipated to be recognized over a weighted average period of approximately 1.75 years.
For the years ended December 31, 2013 and 2012, respectively, approximately $3 million and $0 million of cash was paid and
reflected as a financing activity in the statements of cash flows related to the minimum statutory tax withholding for vested
RSUs.
2010 Board of Managers Equity Award
In June 2010, the 2010 Board of Managers Class E-1 Interest Incentive Plan (the “Plan”) was authorized in order to
attract and reward board members and to promote the creation of long-term value for interest holders of Delphi. On June 30,
2010, 24,000 restricted interests of a newly created class of membership interests, Class E-1 membership interests, were issued
to board members. The restricted interests were initially subject to continued service through applicable vesting dates through
November 1, 2012. However, in conjunction with the completion of the initial public offering in November 2011, these
interests were exchanged for 1,938,249 ordinary shares of Delphi Automotive PLC.
At the time of issuance, the fair market value of the Class E-1 membership interests was estimated to be $19 million,
based on a contemporaneous valuation performed by an independent valuation specialist, utilizing generally accepted valuation
approaches. Beginning in the third quarter of 2010, Delphi recognized compensation cost on a straight-line basis.
Compensation expense recognized during the year ended December 31, 2011 totaled $14 million, net of taxes of $0 million.
There were no cash flow impacts for the year ended December 31, 2011.
Value Creation Plan
During the second quarter of 2010, the Board of Managers approved and authorized the VCP, a long-term incentive plan
designed to assist the Company in attracting, retaining, motivating and rewarding key employees of the Company and
promoting the creation of long-term value. Participants were granted an award in September 2010 for the performance period