Red Lobster 2016 Annual Report Download - page 57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
DARDEN RESTAURANTS, INC. • 2016 ANNUAL REPORT 53
The following table presents a summary of our cash-settled performance
stock unit activity as of and for the fiscal year ended May 29, 2016:
Units Weighted-Average
(All units settled in cash) (in millions) Fair Value Per Unit
Outstanding beginning of period 0.38 $65.54
Awards issued in conversion as a result
of the separation of Four Corners 0.05
Units granted — —
Units vested (0.17) 67.17
Units canceled (0.10) 43.35
Performance unit adjustment 0.05 43.84
Outstanding end of period 0.21 $67.48
As of May 29, 2016, our cash-settled performance stock unit liability
was $10.4 million, including $7.1 million recorded in other current liabilities
and $3.3 million recorded in other liabilities on our consolidated balance
sheets. As of May 31, 2015, our cash-settled performance stock unit liability
was $15.9 million, including $11.2 million recorded in other current liabilities
and $4.7 million recorded in other liabilities on our consolidated balance sheets.
Cash-settled performance stock units cliff vest three years from the
date of grant, where 0.0 percent to 150.0 percent of the entire grant is
earned or forfeited at the end of three years. The number of units that actually
vests will be determined for each year based on the achievement of Company
performance criteria set forth in the award agreement and may range from
0.0 percent to 150.0 percent of the annual target. All awards will be settled
in cash. The awards are measured based on the market price of our
common stock each period, are amortized over the service period and the
vested portion is carried as a liability in our accompanying consolidated
balance sheets. As of May 29, 2016, there was $2.4 million of unrecognized
compensation cost related to unvested performance stock units granted
under our stock plans. This cost is expected to be recognized over a
weighted-average period of 1.1 years. The total fair value of cash-settled
performance stock units that vested in fiscal 2016 was $11.4 million.
The following table presents a summary of our equity-settled
performance stock unit activity as of and for the fiscal year ended
May 29, 2016:
Weighted-Average
Units Grant Date
(in millions) Fair Value Per Unit
Outstanding beginning of period — $ —
Units granted 0.19 65.23
Units vested — —
Units canceled (0.02) 65.42
Outstanding end of period 0.17 $65.21
Beginning in fiscal 2016, two new types of equity-settled
performance-based restricted stock units were issued, where 0.0 percent
to 150.0 percent of the entire grant is earned or forfeited at the end of the
respective vesting periods, which range from three to four years. The number
of units that actually vest will be determined based on the achievement of
performance criteria set forth in the award agreements and may range from
0.0 percent to 150.0 percent of target. Half of these performance awards,
which are measured against company-specific targets, are granted at a
value equal to the market price of our common stock on the date of grant,
and amortized over the service period. The other half of these awards, which
are measured against market-based targets, are measured based on esti-
mated fair value as of the date of grant using a Monte Carlo simulation, and
amortized over the service period. As of May 29, 2016, there was $8.5 mil-
lion of unrecognized compensation cost related to unvested equity-settled
performance stock units granted under our stock plans. This cost is expected
to be recognized over a weighted-average period of 2.7 years. The total fair
value of equity-settled performance stock units that vested during fiscal
2016 was $0.0 million.
We maintain an Employee Stock Purchase Plan to provide eligible
employees who have completed one year of service (excluding senior officers
subject to Section 16(b) of the Securities Exchange Act of 1934, and certain
other employees who are employed less than full time or own 5 percent or
more of our capital stock or that of any subsidiary) an opportunity to invest
up to $5.0 thousand per calendar quarter to purchase shares of our common
stock, subject to certain limitations. Under the plan, up to an aggregate of
3.6 million shares are available for purchase by employees at a purchase
price that is 85.0 percent of the fair market value of our common stock on
either the first or last trading day of each calendar quarter, whichever is
lower. Cash received from employees pursuant to the plan during fiscal 2016,
2015 and 2014 was $4.8 million, $5.2 million and $7.2 million, respectively.