MasterCard 2015 Annual Report Download - page 79

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
73
As of December 31, 2015, there was $28 million of total unrecognized compensation cost related to non-vested Options. The
cost is expected to be recognized over a weighted-average period of 2.3 years.
Restricted Stock Units
The following table summarizes the Company’s RSU activity for the year ended December 31, 2015:
Units
Weighted-Average
Grant-Date Fair
Value
Weighted-Average
Remaining
Contractual Term
Aggregate Intrinsic
Value
(in millions) (in years) (in millions)
Outstanding at January 1, 2015 . . . . . . . . . . . . . . . . 4.2 $ 56
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 $ 88
Converted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) $ 42
Forfeited/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) $ 68
Outstanding at December 31, 2015. . . . . . . . . . . . . 3.8 $ 71 1.2 $ 366
RSUs vested and expected to vest at December
31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 $ 71 1.1 $ 353
The fair value of each RSU is the closing stock price on the New York Stock Exchange of the Company’s Class A common stock on
the date of grant, adjusted for the exclusion of dividend equivalents. Upon vesting, a portion of the RSU award may be withheld
to satisfy the minimum statutory withholding taxes. The remaining RSUs will be settled in shares of the Company’s Class A
common stock after the vesting period. As of December 31, 2015, there was $99 million of total unrecognized compensation
cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 1.8 years.
Performance Stock Units
The following table summarizes the Company’s PSU activity for the year ended December 31, 2015:
Units
Weighted-Average
Grant-Date Fair
Value
Weighted-Average
Remaining
Contractual Term
Aggregate Intrinsic
Value
(in millions) (in years) (in millions)
Outstanding at January 1, 2015 . . . . . . . . . . . . . . . . 0.6 $ 74
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 $ 99
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 $ 56
Converted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) $ 83
Forfeited/expired . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ —
Outstanding at December 31, 2015. . . . . . . . . . . . . 0.5 $ 72 0.9 $ 53
PSUs vested and expected to vest at December
31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 $ 71 0.9 $ 52
Since 2013, PSUs containing performance and market conditions have been issued. Performance measures used to determine
the actual number of shares that vest after three years include net revenue growth, EPS growth, and relative total shareholder
return (“TSR”). Relative TSR is considered a market condition, while net revenue and EPS growth are considered performance
conditions. The Monte Carlo simulation valuation model is used to determine the grant-date fair value.
Compensation expenses for PSUs are recognized over the requisite service period if it is probable that the performance target
will be achieved and subsequently adjusted if the probability assessment changes. As of December 31, 2015, there was $9 million
of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-
average period of 1.7 years.