Paychex 2016 Annual Report Download - page 65

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PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other information pertaining to stock option grants is as follows:
Year ended May 31,
In millions, except per share amounts 2016 2015 2014
Total intrinsic value of stock options exercised ........................ $14.5 $17.6 $18.9
Total grant-date fair value of stock options vested ..................... $ 4.0 $ 3.6 $ 3.0
Performance stock options: In July 2011, the Board approved a special award of performance-based stock
options under a Long-Term Incentive Plan. Subsequent grants of this award have been made upon hire of new
officers. Under this award, stock options were granted to officers with vesting dependent on achievement against
long-term strategic and financial objectives. Total shares earned and vested are based on achievement against
pre-established targets for fiscal 2016. However, the terms of the award allowed for accelerated vesting of up to
50% of the award at target depending on achievement against pre-established targets for fiscal 2014. Based on
achievement against pre-established targets for fiscal 2016, a total of 63.0% of the award was earned. In July
2014, 23.5% of the awards accelerated and vested based on achievement against performance targets for fiscal
2014. The remaining 39.5% of the awards will vest in July 2016.
The following table summarizes performance stock option activity for the year ended May 31, 2016:
In millions, except per share amounts
Shares subject
to options
Weighted-average
exercise price per
share
Weighted-average
remaining
contractual term
(years)
Aggregate intrinsic
value(1)
Outstanding as of May 31, 2015 ... 2.7 $31.31
Granted ...................... — $ —
Exercised .................... (0.1) $31.11
Forfeited ..................... (0.1) $29.85
Expired ...................... — $ —
Outstanding as of May 31, 2016 ... 2.5 $31.36 5.4 $57.9
Exercisable as of May 31, 2016 .... 0.4 $31.22 5.2 $ 9.6
(1) Market price of the underlying stock as of May 31, 2016 less the exercise price.
For fiscal 2016, the total intrinsic value of the performance stock options exercised was $1.0 million.
Restricted stock units: The Board grants restricted stock units (“RSUs”) to non-officer management. An
RSU is an agreement to issue shares at the time of vesting with no associated exercise cost. For each unit granted,
the holder will receive one share of stock at the time of vesting. RSUs do not have voting rights or earn dividend
equivalents during the vesting period. These awards vest 20% per annum over five years. The fair value of RSUs
is equal to the closing market price of the underlying common stock as of the date of grant, adjusted for the
present value of expected dividends over the vesting period.
47