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FORM 10-K
58
• Expected life - Represents the period of time that options granted are expected to be outstanding. The Company uses historical
experience to estimate the expected life of options granted.
• Expected volatility – Measure of the amount by which the Company's stock price has historically fluctuated.
• Expected dividend yield – The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends.
The table below identifies the weighted-average assumptions used for grants awarded during the years ended December 31, 2014, 2013
and 2012:
December 31,
2014 2013 2012
Risk free interest rate 1.60% 0.96% 0.59%
Expected life 5.3 Years 5.0 Years 3.9 Years
Expected volatility 24.3% 31.0% 33.5%
Expected dividend yield —% —% —%
The Company's forfeiture rate is the estimated percentage of options awarded that are expected to be forfeited or canceled prior to
becoming fully vested. The Company's estimate is evaluated periodically, and is based upon historical experience at the time of evaluation
and reduces expense ratably over the vesting period or the minimum required service period.
The following table summarizes activity related to stock options awarded by the Company for the years ended December 31, 2014, 2013
and 2012:
For the Year Ended
December 31,
2014 2013 2012
Compensation expense for stock options awarded (in millions) $ 18.7 $ 17.8 $ 18.5
Income tax benefit from compensation expense related to stock options (in
millions) 6.9 6.8 7.1
Total intrinsic value of stock options exercised (in millions) 147.2 95.8 113.6
Cash received from exercise of stock options (in millions) 59.6 59.7 54.9
Weighted-average grant-date fair value of options awarded $ 38.18 $ 29.98 $ 23.57
Weighted-average remaining contractual life of exercisable options (in years) 4.56 4.77 5.13
The remaining unrecognized compensation expense related to unvested stock option awards at December 31, 2014, was $28.3 million
and the weighted-average period of time over which this cost will be recognized is 2.4 years.
Restricted stock:
The Company's performance incentive plan provides for the award of shares of restricted stock to its corporate and senior management
that vest evenly over a three-year period and are held in escrow until such vesting has occurred. Generally, unvested shares are forfeited
when an employee ceases employment. The fair value of shares awarded under this plan is based on the closing market price of the
Company's common stock on the date of award and compensation expense is recorded over the minimum required service period.
The table below identifies the employee restricted stock activity under this plan during the year ended December 31, 2014:
Shares
(in thousands)
Weighted-Average Grant-Date
Fair Value
Non-vested at December 31, 2013 20 $ 92.02
Granted during the period 13 147.58
Vested during the period (1) (16) 103.09
Forfeited during the period (1) 121.85
Non-vested at December 31, 2014 16 $ 123.68
(1) Includes 7 thousand shares withheld to cover employees' taxes upon vesting.
The Company's director stock plan provides for the award of shares of restricted stock that vest evenly over a three-year period and are
held in escrow until such vesting has occurred. Unvested shares are forfeited when a director ceases their service on the Company's