Lifetime Fitness 2013 Annual Report Download - page 77

LIFE TIME FITNESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
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quarter 2011, we determined that achieving the 2012 diluted EPS targets required for vesting of the remaining
restricted shares was probable. As a result, we recognized a cumulative, non-cash performance share-based
compensation expense of $6.8 million in fourth quarter 2011 and $2.6 million in 2012. All of the vested restricted
shares were included in our share count at December 31, 2012 and 2013.
Special 2012 Long-Term Performance-Based Restricted Stock Grant
In May, July and August 2012, the Compensation Committee of our Board of Directors approved the grant of a total
of 658,500 shares of long-term performance-based restricted stock to serve as an incentive to our senior
management team to achieve certain cumulative diluted EPS and ROIC targets during performance periods that end
on December 31, 2015 and December 31, 2016. These shares are included in the overall number of 1,052,466
restricted shares granted during the year ended December 31, 2012.
The Compensation Committee set the cumulative diluted EPS targets at 1.5 times the compound annual growth rate
under our then-current long range plan and the ROIC targets at 1.1 times the ROIC under our then-current long
range plan. The following are the performance metrics underlying the targets:
Cumulative Diluted EPS ROIC
Measurement
Period EPS Target Measurement Period ROIC Target
2015 Performance Period 4/1/2012 1/1/2015
50% vest if we achieve both performance
targets through through
12/31/2015 $ 13.68 12/31/2015 8.9%
2016 Performance Period 4/1/2012 1/1/2016
All/remaining vest if we achieve both
performance targets through through
12/31/2016 $ 18.96 12/31/2016 9.0%
A maximum of $28.8 million could be recognized as compensation expense under this grant if all cumulative diluted
EPS and ROIC targets are met. We do not believe that achievement of either the cumulative diluted EPS or the
ROIC targets is currently probable, and, therefore, we did not recognize any compensation expense associated with
the grant during the years ended December 31, 2013 or 2012.
If it becomes probable that the cumulative diluted EPS and ROIC performance targets will be achieved, a
cumulative adjustment will be recorded and the remaining compensation expense will be recognized over the
remaining performance period. If all of the targets had been considered probable at December 31, 2013, we would
have recognized $11.6 million of non-cash performance share-based compensation expense during the year ended
December 31, 2013. The probability of reaching the targets is evaluated each reporting period. If we later
determined that it is no longer probable that the minimum cumulative diluted EPS and ROIC performance targets for
the grants will be met, no further compensation expense would be recognized and any previously recognized
compensation expense would be reversed. In the event that we do not achieve the specified cumulative diluted EPS
and ROIC targets for the performance period ending December 31, 2016, the restricted shares will be forfeited.
None of these shares were included in our total diluted share count at December 31, 2013 or 2012.