Sunbeam 2013 Annual Report Download - page 46

42 Jarden Corporation Annual Report 2013
Stock-Based Compensation
The Company estimates the fair value of share-based awards on the date of grant, which is generally the date the award is approved
by the Board of Directors of the Company (the “Board”) or committee thereof. The fair value of stock options is determined using the
Black-Scholes option-pricing model. The fair value of the market-based restricted stock awards is determined using a Monte Carlo
simulation embedded in a lattice model, and for all other restricted stock awards, based on the closing price of the Company’s common
stock on the date of grant. The determination of the fair value of the Company’s stock option awards and restricted stock awards is
based on a variety of factors including, but not limited to, the Company’s common stock price, expected stock price volatility over the
expected life of awards, and actual and projected exercise behavior (see Note 13). Additionally, the Company has estimated forfeitures
for share-based awards at the dates of grant based on historical experience. The forfeiture estimate is revised as necessary if actual
forfeitures differ from these estimates.
The Company issues restricted stock awards whose restrictions lapse upon either the passage of time (service vesting), achieving
performance targets, attaining Company common stock price thresholds, or some combination of these restrictions. For those
restricted stock awards with only service conditions, the Company recognizes compensation cost on a straight-line basis over the
explicit service period. For those restricted stock awards with market conditions, the Company recognizes compensation cost on a
straight-line basis over the derived service period unless the market condition is satised prior to the end of the derived service period.
For performance only awards, the Company recognizes compensation cost on a straight-line basis over the implicit service period
which represents the Company’s best estimates for when the target will be achieved. If it becomes apparent that the original service
periods are no longer accurate, the remaining unrecognized compensation cost will be recognized over the revised remaining service
periods. For restricted stock awards that contain both service and market or performance vesting conditions, compensation cost is
recognized over the shorter of the two conditions if only one of the conditions must be met or the longer of the two conditions if both
conditions must be met.
Compensation costs for stock-based awards reects the number of awards expected to vest and is ultimately adjusted in future
periods to reect the actual number of vested awards. Compensation costs for awards with performance conditions is only recognized
if and when it becomes probable that the performance condition will be achieved. The probability of vesting is reassessed each
reporting period and the compensation costs is adjusted based on this probability assessment. The cumulative effect on current and
prior periods of a change in the estimated number of shares for which the requisite service is expected to be or has been rendered is
recognized in compensation cost in the period of the change.
For restricted stock awards that contain performance or market vesting conditions, the Company excludes these awards from diluted
earnings per share computations until the end of the reporting period that the contingency is met.
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Pension and Postretirement Benet Plans
The Company records annual amounts relating to its pension and postretirement benet plans based on calculations which include
various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and healthcare
cost trend rates. The Company reviews its actuarial assumptions on an annual basis and makes modications to the assumptions based
on current rates and trends when it is deemed appropriate to do so. The effect of modications is generally recorded or amortized
over future service periods. The assumptions utilized in recording its obligations under its pension and postretirement benet plans are
based on its experience, market conditions and input from its actuaries and investment advisors.
Reorganization Costs
Reorganization costs include costs associated with exit or disposal activities, including costs for employee and lease terminations,
facility closings or other exit activities.
2. New Accounting Guidance and Adoption of New Accounting Guidance
New Accounting Guidance
In July 2013, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.2013-
11, “Presentation of an Unrecognized Tax Benet When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists” (“ASU 2013-11”). ASU No.2013-11 provides explicit guidance on the nancial statement presentation of an
unrecognized tax benet when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11
is effective for scal years and interim periods within those years, beginning after December15, 2013. The Company does not expect
the provisions of ASU 2013-11 to have a material effect on the consolidated nancial position, results of operations or cash ows of the
Company.
In March 2013, the FASB issued ASU No.2013-05, “Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition
of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity” (“ASU 2013-05”). The
objective of ASU 2013-05 is to resolve the diversity in practice as it relates to the release of the cumulative translation adjustment into
Notes to Consolidated Financial Statements
Jarden Corporation Annual Report 2013 (Dollars in millions, except per share data and unless otherwise indicated)