NetSpend 2014 Annual Report Download - page 74

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shares. Effective February 1, 2010 and March 5, 2012, no additional awards may be made from the Total System
Services, Inc. 2000 and 2002 Long-Term Incentive Plans, respectively.
Share-Based Compensation
Share-based compensation costs are classified as selling, general and administrative expenses on the Company’s
statements of income and corporate administration and other expenses for segment reporting purposes. TSYS
does not include amounts associated with share-based compensation as costs capitalized as software
development and contract acquisition costs as these awards are typically granted to individuals not involved in
capitalizable activities. For the year ended December 31, 2014, share-based compensation was $30.8 million
compared to $28.9 million and $18.6 million for the same periods in 2013 and 2012, respectively.
Nonvested Awards: The Company granted shares of TSYS common stock to certain key employees and non-
management members of its Board of Directors. The grants to certain key employees were issued under
nonvested stock bonus awards for services to be provided in the future by such officers and employees. The
grants to the Board of Directors were fully vested on the date of grant.
On July 1, 2013, the Company issued 870,361 shares of TSYS common stock as nonvested stock replacement
awards with a market value of $21.5 million as part of the NetSpend acquisition. The nonvested stock bonus
awards to employees of NetSpend are for services to be provided in the future and vest over varying periods.
The NetSpend awards were converted into equivalent shares of Company’s common stock on the acquisition
date. The value of the stock at the date of issuance is charged as compensation expense over the vesting periods
of the awards.
On July 18, 2013, the Company issued 212,694 retention shares of TSYS common stock with a market value of
$5.5 million to certain key employees of NetSpend. The nonvested stock bonus awards to certain key employees
are for services to be provided in the future and vest over periods ranging from two to four years. The market
value of the TSYS common stock at the date of issuance is charged as compensation expense over the vesting
periods of the awards.
The following table summarizes the number of shares granted each year:
2014 2013 2012
Number of shares ...................................................... 672,724 1,667,246 310,690
Market value (in millions) ................................................ $ 20.6 41.3 6.7
A summary of the status of TSYS’ nonvested shares as of December 31, 2014, 2013 and 2012 and the changes
during the periods are presented below:
2014 2013 2012
Nonvested shares
(in thousands, except per share data) Shares
Weighted
Average
Grant-Date
Fair Value Shares
Weighted
Average
Grant-Date
Fair Value Shares
Weighted
Average
Grant-Date
Fair Value
Outstanding at beginning of year ............. 1,783 $24.19 554 $19.96 618 $16.80
Granted .................................. 673 30.67 1,667124.75 311 21.47
Vested .................................... (602) 23.74 (328) 19.95 (366) 15.91
Forfeited/canceled ......................... (85) 25.47 (110) 23.82 (9) 19.85
Outstanding at end of year ................... 1,769 $26.75 1,783 $24.19 554 $19.96
1 Includes the issuance of approximately 870,361 stock replacement awards in connection with the acquisition of NetSpend
in 2013. These awards had a market value of $21.5 million. A portion of the expense associated with these options has
been included as a component of the total purchase price of the NetSpend acquisition. Refer to Note 24.
As of December 31, 2014, there was approximately $30.5 million of total unrecognized compensation cost
related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a
remaining weighted average period of 2.0 years.
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