Tecumseh Products 2014 Annual Report Download - page 58

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Non-Qualified Stock Options: Number of awards
Weighted average grant date
value per share
Outstanding at January 1, 2014 — $ —
Granted 275,513 $ 3.06
Exercised —$ —
Forfeited —$ —
Outstanding at December 31, 2014 275,513 $ 3.06
The initial value of the phantom shares is based on the closing price of our Class A Common Stock as of the grant date. The
initial value of the SARs, which are the economic equivalent of options, is based on a Black-Scholes model as of the grant date.
We measure the fair value of each SAR based on the closing stock price of Common Shares, or Class A Common Stock prior to
May 2, 2014 (see Note 9, Stockholders' Equity", for further discussion), on the last day of the period, using a Black-Scholes
valuation model. The fair value of each SAR was estimated as of December 31, 2014, 2013 and 2012 using the following
assumptions:
2014 2013 2012
Risk-free interest rate 0.04%-0.67% 0.16%-0.78% 0.27%-0.52%
Dividend yield 0.0% 0.0% 0.0%
Expected life (years) 0.2-2.0 years 1.2-3.0 years 2.2-4.0 years
Volatility 53.58% 62.21% 63.63%
Compensation expense (income) related to outstanding share-based compensation awards under the Long-Term Incentive Cash
Award Plan for the years ended December 31, 2014, 2013 and 2012 was $(0.7) million, $2.3 million and $2.6 million,
respectively. The balance of the fair value that has not yet been recorded as expense is considered an unrecognized liability.
The total unrecognized compensation liability with respect to awards under the Long-Term Incentive Cash Award Plan as
calculated at December 31, 2014 was immaterial and for December 31, 2013 was $1.7 million. Total cash paid under this plan
for the years ended December 31, 2014 and 2013 was $1.0 million and $1.6 million, respectively.
Prior to 2014, we granted deferred stock units ("DSUs") to our non-employee directors under our Outside Directors' Deferred
Stock Unit Plan. These awards were fully vested when made. We measure the fair value of outstanding DSUs based upon the
closing stock price of our Common Shares, or Class A Common Stock prior to May 2, 2014 (see Note 9, Stockholders' Equity",
for further discussion), on the last day of the reporting period. We pay out the DSUs to a director after the earlier of a Company
Change in Control, as defined in the plan, or the date when he or she ceases to be a non-employee director for any reason. Since
the DSUs are settled in cash rather than by issuing equity instruments, we record an expense with a corresponding liability on
our Consolidated Balance Sheets. Total expense (income) related to the DSUs for the years ended December 31, 2014, 2013
and 2012 was $(0.3) million, $0.8 million and $0.5 million, respectively. We recorded a liability of $0.2 million and $1.2
million as of December 31, 2014 and 2013, respectively. Total cash paid for DSUs in the year ended December 31, 2014 and
2013 was $0.7 million and $0.2 million, respectively.
In 2014, we granted restricted stock units ("RSUs") to our non-employee directors and our Chief Executive Officer under our
2014 Omnibus Incentive Plan. These RSUs vest immediately before our 2015 Annual Meeting of Shareholders if the non-
employee director or Chief Executive Officer, as applicable, is serving on our Board on that date. The RSUs will be settled
75% in our Common Shares and 25% in cash. For the RSUs settled in our Common Shares, we record an expense and
corresponding change in "Paid in Capital" on our Consolidated Balance Sheets, based on the fair value of the RSUs at grant
date and recognized over the vesting period. For the year ended December 31, 2014, the expense was $0.3 million. For the
RSUs settled in cash, we record an expense with a corresponding liability on our Consolidated Balance Sheets recognized over
the vesting period. This liability will be remeasured in each quarterly reporting period, based on the closing price of our
Common Shares on the last day of each period. No cash was paid for RSUs in the year ended December 31, 2014.
During fourth quarter 2014, we granted non-qualified stock options under our 2014 Omnibus Incentive Plan to certain
executive officers and key employees. The stock options will be settled in our Common Shares and will vest in three equal
annual installments beginning December 2015. For the stock options settled in our Common Shares, we record an expense
and corresponding change in "Paid in Capital" on our Consolidated Balance Sheets. For the year ended December 31, 2014,
the expense was immaterial. The value of each stock option is based on a Black-Scholes valuation model as of December 31,
2014 using the following assumptions: