Assurant 2012 Annual Report Download - page 119

ASSURANT, INC.2012 Form10-K F-43
16 Stock Based Compensation
As of December31, 2012, there was $11,972 of unrecognized
compensation cost related to outstanding PSUs. That cost is
expected to be recognized over a weighted-average period of 0.75
years.  e total fair value of shares vested and issued during the
year ended December31, 2012 was $24,403.  ere were no PSUs
vested and issued during the years ended December31, 2011
and 2010.
 e fair value of PSUs with market conditions was estimated on the
date of grant using a Monte Carlo simulation model, which utilizes
multiple variables that determine the probability of satisfying the
market condition stipulated in the award. Expected volatilities for
awards issued during the years ended December31, 2012 and 2011
were based on the historical stock prices of the Company’s stock and
peer insurance group.  e expected term for grants issued during the
year ended December31, 2012, 2011 and 2010 was assumed to equal
the average of the vesting period of the PSUs.  e risk-free rate was
based on the U.S. Treasury yield curve in e ect at the time of grant.
For awards granted during the year ended December31,
2012 2011 2010
Expected volatility 30.18% 59.39% 60.16%
Expected term (years) 2.81 2.81 2.80
Risk free interest rate 0.42% 1.18% 1.30%
Long-Term Incentive Plan
Prior to the approval of the ALTEIP, share based awards were granted
under the 2004 Assurant Long-Term Incentive Plan (“ALTIP”), which
authorized the granting of up to 10,000,000 new shares of the Company’s
common stock to employees and o cers under the ALTIP, Business
Value Rights Program (“BVR”) and CEO Equity Grants Program.
Under the ALTIP, the Company was authorized to grant restricted
stock and SARs. Since May2008, no new grants have been made under
this plan and the impact of these grants on the consolidated  nancial
statements is immaterial.
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan (“ESPP”), the Company
is authorized to issue up to 5,000,000 new shares to employees who
are participants in the ESPP.  e ESPP allows eligible employees to
contribute, through payroll deductions, portions of their after-tax
compensation in each o ering period toward the purchase of shares of
the Company’s common stock.  ere are two o ering periods during
the year (January1 through June30 and July1 through December31)
and shares are purchased at the end of each o ering period at 90% of
the lower of the closing price of the common stock on the  rst or last
day of the o ering period. Participants’ contributions are limited to a
maximum contribution of $7.5 per o ering period, or $15 per year.
 e ESPP is o ered to individuals who are scheduled to work at least 20
hours per week and at least  ve months per year, have been continuously
employed for at least six months by the start of the o ering period, are
not temporary employees (employed less than 12 months), and have
not been on a leave of absence for more than 90 days immediately
preceding the o ering period. Participants must be employed on the
last trading day of the o ering period in order to purchase Company
shares under the ESPP.  e maximum number of shares that can be
purchased each o ering period is 5,000 shares per employee.
In July2012, the Company issued 110,699 shares to employees at a
discounted price of $31.36 for the o ering period of January1, 2012
through June30, 2012. In July2011, the Company issued 106,373
shares to employees at a discounted price of $32.64 for the o ering
period of January1, 2011 through June30, 2011.
In January2013, the Company issued 107,535 shares at a discounted
price of $31.23 for the o ering period of July1, 2012 through
December31, 2012. In January2012, the Company issued 103,243
shares at a discounted price of $32.98 for the o ering period of July1,
2011 through December31, 2011.
 e compensation expense recorded related to the ESPP was $1,396,
$1,306 and $1,707 for the years ended December31, 2012, 2011
and 2010, respectively.  e related income tax bene t for disquali ed
disposition was $157, $180 and $290 for the years ended December31,
2012, 2011 and 2010, respectively.
 e fair value of each award under the ESPP was estimated at the
beginning of each o ering period using the Black-Scholes option-pricing
model and assumptions in the table below. Expected volatilities are
based on implied volatilities from traded options on the Company’s
stock and the historical volatility of the Company’s stock.  e risk-
free rate for periods within the contractual life of the option is based
on the U.S. Treasury yield curve in e ect at the time of grant.  e
dividend yield is based on the current annualized dividend and share
price as of the grant date.
For awards issued during the years ended December31,
2012 2011 2010
Expected volatility 25.26-36.77% 27.13-32.41% 30.84-55.94%
Risk free interest rates 0.06-0.10% 0.19-0.22% 0.18-0.33%
Dividend yield 1.72-1.95% 1.64-1.85% 1.97-2.46%
Expected term (years) 0.5 0.5 0.5