Invacare 2013 Annual Report Download - page 98

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-24
In Europe, the Company maintains defined benefit plans in Switzerland and in the Netherlands. In Switzerland, a statutory
pension plan is maintained with a private insurance Company and, in accordance with Swiss law, the plan functions as a defined
contribution plan whereby employee and employer contributions are defined as a percentage of individual salary depending on
the age of the employee and a guaranteed interest rate, which is annually defined by the Swiss Pension Fund. Under U.S. GAAP,
the plan is treated as a defined benefit plan. In the Netherlands, the statutory pension plan contains benefits and provisions for an
Old Age Pension benefit that starts at age 65 and is payable until death and a Survivors Pension that starts immediately after the
death of the insured and is payable until the death of the surviving spouse. The plan also provides for a Temporary Survivors
Pension, an Orphans Pension and Premium Waiver During Disability. Under U.S. GAAP the plan is treated as a defined benefit
plan. Income for the plans was $205,000, $105,000 and $215,000 in 2013, 2012 and 2011, respectively.
Accumulated other comprehensive income associated with the SERP, DBO, Swiss and Netherlands pension plans combined
was $5,414,000 and $6,785,000 as of December 31, 2013 and 2012, respectively for a net change of $1,371,000 with $478,000
in net periodic benefit income recognized during the year.
Shareholders’ Equity Transactions
The Company’s Common Shares have a $.25 stated value. The Common Shares and the Class B Common Shares generally
have identical rights, terms and conditions and vote together as a single class on most issues, except that the Class B Common
Shares have ten votes per share, carry a 10% lower cash dividend rate and, in general, can only be transferred to family members.
Holders of Class B Common Shares are entitled to convert their shares into Common Shares at any time on a share-for-share basis.
On May 16, 2013 shareholders approved the Invacare Corporation 2013 Equity Compensation Plan (the “2013 Plan”), which
was adopted on March 27, 2013 by the Company's Board of Directors (the “Board”). The Board adopted the 2013 Plan because
the ten-year term of the Company's prior equity plan, the Invacare Corporation Amended and Restated 2003 Performance Plan
(the “2003 Plan”), expired on May 21, 2013. No new awards will be granted under the 2003 Plan following its expiration, but
awards granted prior to its expiration will remain in effect under their original terms.
The 2013 Plan uses a fungible share-counting method, under which each common share underlying an award of stock
options or SARs will count against the number of total shares available under the 2013 Plan as one share; and each common share
underlying any award other than a stock option or a stock appreciation rights (“SAR”) will count against the number of total shares
available under the 2013 Plan as two shares. Any common shares that are added back to the 2013 Plan as the result of the cancellation
or forfeiture of an award granted under the 2013 Plan will be added back in the same manner such shares were originally counted
against the total number of shares available under the 2013 Plan. Each common share that is added back to the 2013 Plan due to
a cancellation or forfeiture of an award granted under the 2003 Plan will be added back as one common share.
The Compensation and Management Development Committee of the Board (the “Committee”), in its discretion, may grant
an award under the 2013 Plan to any director or employee of the Company or an affiliate. The 2013 Plan initially allows the
Committee to grant up to 4,460,337 Common Shares in connection with the following types of awards with respect to shares of
the Company's common shares: incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units,
unrestricted stock, and performance shares. The Committee also may grant performance units that are payable in cash. The
Committee has the authority to determine which participants will receive awards, the amount of the awards and the other terms
and conditions of the awards.
During 2013, 2012 and 2011, the Committee granted 756,700, 761,892 and 608,896 non-qualified stock options, respectively,
each having a term of ten years and generally granted at the fair market value of the Company’s Common Shares on the date of
grant under the 2003 Plan. There were no stock appreciation rights outstanding at December 31, 2013, 2012 or 2011.
Restricted stock awards for 114,700, 118,200, and 101,329 shares were granted in years 2013, 2012 and 2011, respectively,
without cost to the recipients. The 2013 weighted average fair value of the 2013 restricted stock awards was $14.49. The restricted
stock awards vest ratably over the four years after the award date. There were 97,695 restricted stock awards with a weighted
average fair value of $20.34 that vested in 2013 and 12,925 restricted stock awards were forfeited in 2013.
At December 31, 2013 and 2012, there were 264,878 and 260,548 shares, respectively, for restricted stock awards that were
unvested. Unearned restricted stock compensation of $3,705,000 in 2013, $4,323,000 in 2012 and $5,227,000 in 2011, determined
as the market value of the shares at the date of grant, is being amortized on a straight-line basis over the vesting period. Compensation
expense of $2,031,000, $2,241,000 and $2,199,000 was recognized in 2013, 2012 and 2011, respectively, related to restricted stock
awards granted since 2004.