Paychex 2014 Annual Report Download - page 68

PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Restricted stock units: The Board grants restricted stock units (“RSUs”) to non-officer management. An
RSU is an agreement to issue shares at the time of vesting with no associated exercise cost. For each unit granted,
the holder will receive one share of stock at the time of vesting. RSUs do not have voting rights or earn dividend
equivalents during the vesting period. These awards vest 20% per annum over five years with a small population
of awards vesting on the fourth anniversary of the grant date. The fair value of RSUs is equal to the closing
market price of the underlying common stock as of the date of grant, adjusted for the present value of expected
dividends over the vesting period.
The following table summarizes RSU activity for the year ended May 31, 2014:
In millions, except per share amounts RSUs
Weighted-average
grant-date
fair value per
share
Weighted-average
remaining vesting
period (years)
Aggregate intrinsic
value(1)
Nonvested as of May 31, 2013 ..... 1.6 $26.29
Granted ..................... 0.7 $36.37
Vested ...................... (0.5) $25.65
Forfeited ..................... (0.1) $29.39
Nonvested as of May 31, 2014 ..... 1.7 $30.52 3.0 $70.5
(1) Intrinsic value for RSUs is the market price of the underlying stock as of May 31, 2014.
Other information pertaining to RSUs is as follows:
Year ended May 31,
In millions, except per share amounts 2014 2013 2012
Weighted-average grant-date fair value of RSUs granted ............. $36.37 $28.59 $27.67
Total intrinsic value of RSUs vested ............................. $ 18.3 $ 15.5 $ 11.0
Total grant-date fair value of RSUs vested ........................ $ 12.1 $ 13.4 $ 9.5
Restricted stock awards: The Board has approved grants of restricted stock awards to the Company’s
officers and outside directors. All shares underlying awards of restricted stock are restricted in that they are not
transferable until they vest. The recipients of the restricted stock have voting rights and earn dividends, which are
paid to the recipient at the time of vesting of the awards. If the recipient leaves Paychex prior to the vesting date
for any reason, the shares of restricted stock and the dividends accrued on those shares will be forfeited and
returned to Paychex.
For restricted stock awards granted to officers prior to July 2010, the shares vest upon the fifth anniversary
of the grant date provided the recipient is still an employee of the Company on that date. These awards have a
provision for the acceleration of vesting based on achievement of performance targets established by the Board.
If the established targets are met for a fiscal year, up to one-third of the award may vest. If all the targets are met
for three consecutive years, the award will be fully vested. Beginning in July 2010, time-vested restricted stock
awards were granted to officers, which vest one-third per annum. For grants to outside directors prior to October
2010, the shares vested on the third anniversary of the grant date. Beginning in October 2010, restricted stock
granted to outside directors vest on the one-year anniversary of the grant date. The fair value of restricted stock
awards is equal to the closing market price of the underlying common stock as of the date of grant and is
expensed over the requisite service period on a straight-line basis.
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