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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share amounts)
87
Stock Plans
We have a long-term incentive program whereby eligible employees may be granted restricted stock units, non-qualified stock options,
other stock-based awards, cash or any combination thereof. The Executive Compensation Committee of the Board of Directors administers
these plans. We settle employee stock compensation awards with treasury shares. At December 31, 2015, there were 20,092,604 shares
available for future grants under our long-term incentive program.
Restricted Stock Units
Restricted stock units (RSUs) entitle the holder to shares of common stock as the units vest, typically over a three or four year service
period. The following table summarizes information about restricted stock units during 2015 and 2014:
2015 2014
Shares
Weighted
average grant
date fair value Shares
Weighted
average grant
date fair value
Outstanding - beginning of the year 1,819,239 $ 16.41 1,941,312 $ 13.19
Granted 809,436 21.15 685,994 23.62
Vested (802,284) 16.88 (713,886) 14.50
Forfeited (99,177) 17.93 (94,181) 15.11
Outstanding - end of the year 1,727,214 $ 18.30 1,819,239 $ 16.41
The fair value of RSUs is determined based on the stock price on the grant date less the present value of expected dividends. At December 31,
2015, there was $13 million of unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-
average period of 1.6 years. The intrinsic value of RSUs outstanding at December 31, 2015 was $36 million. The intrinsic value of RSUs
vested during 2015, 2014 and 2013 was $18 million, $18 million and $15 million, respectively. The fair value of RSUs vested during
2015, 2014 and 2013 was $14 million, $10 million and $18 million, respectively. During 2013, we granted 1,365,798 RSUs at a weighted
average fair value of $10.37.
Non-employee directors receive restricted stock units which are convertible into shares of common stock one year from date of grant. In
2015 and 2014, 12,824 and 34,344 restricted stock units were awarded to non-employee directors, respectively.
Performance Stock Units
The following table summarizes share information about Performance stock units (PSUs) during 2015:
Years Ended December 31,
2015 2014
Outstanding - beginning of the year 606,715 —
Granted 725,330 493,255
Performance adjustments (188,774) 113,460
Forfeited (35,756)—
Outstanding - end of the year 1,107,515 606,715
PSUs are stock awards where the number of shares ultimately received by the employee is conditional upon the attainment of certain
performance targets as well as total shareholder return relative to peer companies. PSUs vest at the end of a three-year service period and
the actual number of shares awarded may range from 0% to 200% of the target award. However, the final determination of the number
of shares to be issued is made by our Board of Directors, who may reduce, but not increase, the ultimate number of shares to be awarded
(negative discretion). PSUs are accounted for as variable awards until the end of the service period when the grant date is established.
Total share-based compensation expense for PSUs is determined by the product of the number of shares eligible to be awarded and
expected to vest and the fair value of the award, determined using a Monte Carlo simulation model, commencing at the inception of the
requisite service period. During the performance period, the compensation expense for PSUs is re-computed using the fair value of the
award, determined using a Monte Carlo simulation model each balance sheet date. Due to the variability of these awards, significant
fluctuations in share-based compensation expense recognized from one period to the next are possible. At December 31, 2015, there was
$14 million of unrecognized compensation cost related to PSUs that will be recognized over 1.7 years.