Lexmark 2013 Annual Report Download - page 102

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Stock Options
Generally, stock options expire ten years from the date of grant. No stock options were granted during 2013, 2012, or 2011.
A summary of the status of the Company’s stock-based compensation plans as of December 31, 2013 and the change during the year
is presented below:
Options
(In
Millions)
Weighted
Average
Exercise Price
(Per Share)
Weighted
Average
Remaining
Contractual Life
(Years)
Aggregate
Intrinsic Value
(In Millions)
Outstanding at December 31, 2012 4.3 $ 60.45 2.6 $ 3.4
Granted –
Exercised (0.0) 31.43
Forfeited or canceled (1.0) 61.01
Outstanding at December 31, 2013 3.3 60.40 2.2 11.2
Vested and expected to vest at December 31, 2013 3.3 60.82 2.2 10.6
Exercisable at December 31, 2013 3.1 $ 63.10 2.0 $ 7.8
For the year ended December 31, 2013, the total intrinsic value of options exercised was $0.1 million. For the year ended
December 31, 2012, the total intrinsic value of options exercised was $0.3 million. For the year ended December 31, 2011, the total
intrinsic value of options exercised was $0.0 million. As of December 31, 2013, the Company had $0.4 million of total unrecognized
compensation expense, net of estimated forfeitures, related to unvested stock options that will be recognized over the weighted
average period of 0.9 years.
Restricted Stock and Deferred Stock Units
Lexmark has granted RSUs with various vesting periods and generally these awards vest based upon continued service with the
Company or continued service on the Board of Directors. As of December 31, 2013, the Company has issued DSUs to certain
members of management who elected to defer all or a portion of their annual bonus into such units and to certain nonemployee
directors who elected to defer all or a portion of their annual retainer, committee retainer and/or chair retainer into such units. These
DSUs are 100% vested when issued. The Company has also issued supplemental DSUs to certain members of management upon the
election to defer all or a portion of an annual bonus into DSUs. These supplemental DSUs vest at the end of five years based upon
continued employment with the Company. The cost of the RSUs and supplemental DSUs, generally determined to be the fair market
value of the shares at the date of grant, is charged to compensation expense ratably over the vesting period of the award.
During 2013, a certain number of executive officers of the Company were also granted additional RSU awards having a performance
condition, which could range from 37,100 RSUs to 296,800 RSUs depending on the level of achievement. The performance measure
selected to indicate the level of achievement was return on invested capital compared to the S&P Mid-Cap Technology Index. The
performance period for the awards is 3 years ending on December 31, 2015. The expense for these awards is being accrued at target
level. A certain number of executive officers of the Company were also granted additional RSU awards having a performance
condition, which could range from 37,150 RSUs to 148,600 RSUs depending on the level of achievement. The performance measure
selected to indicate the level of achievement was services and software revenue. The performance period for the awards is 1 year
ending on December 31, 2013. The expense for these awards was recognized at target level. The table below includes both awards at
the target level of RSUs.
During 2012, a certain number of executive officers of the Company were also granted additional RSU awards having a performance
condition, which could range from 27,350 RSUs to 218,800 RSUs depending on the level of achievement. The performance measure
selected to indicate the level of achievement was return on invested capital compared to the S&P 500 Technology Index. The
performance period for the awards is 3 years ending on December 31, 2014. The expense for these awards is being accrued at target
level. The table below includes the awards at the target level of RSUs.
During 2011, a certain number of executive officers of the Company were also granted additional RSU awards having a performance
condition, which could range from 94,650 RSUs to 283,950 RSUs depending on the level of achievement. The performance measure
selected to indicate the level of achievement was free operating cash flow, defined as net cash flow provided by operating activities
less net cash outflows for property plant and equipment, and acquisitions and pension contributions. The performance period ended on
December 31, 2011 and, as of that date, the minimum level of the performance condition had not been satisfied. No expense for these
awards was accrued.
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