Western Union 2015 Annual Report Download - page 244

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
142
Stock-Based Compensation
The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated
Statements of Income resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/
deferred stock units for the years ended December 31, 2015, 2014 and 2013 (in millions, except per share data).
Year Ended December 31,
2015 2014 2013
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (42.2) $ (39.7) $ (34.5)
Income tax benefit from stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 11.5 10.0
Net income impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (29.9) $ (28.2) $ (24.5)
Earnings per share:
Basic and Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.06) $ (0.05) $ (0.04)
As of December 31, 2015, there was $5.0 million of total unrecognized compensation cost, net of assumed forfeitures, related
to non-vested stock options which is expected to be recognized over a weighted-average period of 2.0 years, and there was $55.8
million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested restricted stock units and
performance-based restricted stock units which is expected to be recognized over a weighted-average period of 2.4 years.
Fair Value Assumptions
The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western
Union options granted.
Year Ended December 31,
2015 2014 2013
Stock options granted:
Weighted-average risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7% 1.9% 1.2%
Weighted-average dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6% 3.1% 3.7%
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.2% 33.8% 35.3%
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00 6.09 6.09
Weighted-average grant date fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.58 $ 3.95 $ 3.20
Risk-free interest rate - The risk-free rate for stock options granted during the period is determined by using a United States
Treasury rate for the period that coincided with the expected terms listed above.
Expected dividend yield - The Company's expected annual dividend yield is the calculation of the annualized Western Union
dividend divided by an average Western Union stock price on each respective grant date.
Expected volatility - For the Company's executives and non-employee directors, the expected volatility for the 2015, 2014
and 2013 grants was 28.2%, 33.8% and 35.3%, respectively. The expected volatility for the Company's non-executive employees
was 35.2% for the 2013 grants. There were no options granted to non-executive employees in 2015 or 2014. The Company used
a blend of implied and historical volatility. Volatility was calculated using the market price of traded options on Western Union's
common stock and the historical volatility of Western Union stock data.
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