Kraft 2014 Annual Report Download - page 54

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All awards granted prior to the Spin-Off have been adjusted to reflect the conversion as of the Spin-Off. With respect to the
MondelƝz International stock options granted prior to the Spin-Off, the converted options retained the vesting schedule and
expiration date of the original stock options.
The total intrinsic value of our stock options exercised was $93 million in 2014, $69 million in 2013, and $8 million in 2012
subsequent to the Spin-Off. Cash received from options exercised was $115 million in 2014, $96 million in 2013, and $15 million in
2012. The incremental tax benefit realized for the tax deductions from the option exercises totaled $22 million in 2014, $20 million in
2013, and $1 million in 2012.
Restricted Stock, RSUs, and Performance Shares:
We may grant shares of restricted stock or RSUs to eligible employees and directors, giving them, in most instances, all of the
rights of shareholders, except that they may not sell, assign, pledge, or otherwise encumber the shares. Shares of restricted stock
and RSUs granted to employees are subject to forfeiture if certain employment conditions are not met. Restricted stock and RSUs
generally vest on the third anniversary of the grant date.
Performance Shares vest based on varying performance, market, and service conditions. Our Performance Shares pay accrued
dividends at the time of vesting. Shares granted in connection with MondelƝz International’s long-term incentive plan prior to the
Spin-Off do not pay dividends. The unvested shares have no voting rights.
The grant date fair value of the restricted stock, RSUs, and Performance Shares is amortized to earnings over the restriction period.
We recorded compensation expense related to restricted stock, RSUs, and Performance Shares of $77 million in 2014, $47 million
in 2013, and $11 million in 2012 subsequent to the Spin-Off. The deferred tax benefit recorded related to this compensation
expense was $28 million in 2014, $17 million in 2013, and $4 million in 2012. The unamortized compensation expense related to
our restricted stock, RSUs, and Performance Shares was $97 million at December 27, 2014 and is expected to be recognized over
a weighted average period of two years .
Our restricted stock, RSU, and Performance Share activity for the year ended December 27, 2014 was:
In February 2014, as part of our equity compensation program:
Also during 2014, we granted 0.3 million off-cycle RSUs and Performance Shares with a weighted average grant date fair value
per share of $56.80 .
During 2014, 1.4 million shares of restricted stock, RSUs, and Performance Shares vested with an aggregate fair value of $79
million .
Prior to the Spin-Off, our employees participated in various MondelƝz International stock-based compensation plans. As such, we
were allocated stock-based compensation expense of $39 million in 2012 associated with these
49
Number
of Shares
Weighted Average
Grant Date Fair
Value Per Share
Balance at December 28, 2013 4,149,797 $ 44.99
Granted 1,697,965 57.49
Vested (1,424,627) 36.49
Forfeited (365,483 ) 51.52
Balance at December 27, 2014 4,057,652 52.62
• We granted 0.5 million RSUs with a grant date fair value of $55.17 per share.
• We granted 0.8 million Performance Shares with a grant date fair value of $59.97 per share. These awards measure
performance over a multi-year period, during which the employee may earn shares based on internal financial metrics and
the performance of our stock relative to a defined peer group. We measured the grant date fair value using the Monte Carlo
simulation model, which assists in estimating the probability of achieving the market conditions stipulated in the award
grant.
• We granted 0.1 million additional Performance Shares with a weighted average grant date fair value of $34.37 per share
(based on the original 2011 award date), which vested immediately. We granted these shares based on the final business
performance rating for the 2011-2013 award cycle. These shares were adjusted and converted into new equity awards
using a formula designed to preserve the value of the awards immediately prior to the Spin-Off.