Raytheon 2014 Annual Report Download - page 111

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
102
with the RSUs in 2014, approximately $25 million pretax, $17 million after-tax, rather than over the vesting period of the
awards.
Restricted stock activity was as follows:
Shares
(in thousands)
Weighted-
Average
Grant Date
Fair Value
Outstanding at December 31, 2011 5,539 $ 50.38
Granted 2,370 50.38
Vested (1,733) 51.78
Forfeited (338) 50.07
Outstanding at December 31, 2012 5,838 49.98
Granted 1,855 67.46
Vested (1,708) 48.93
Forfeited (648) 52.39
Outstanding at December 31, 2013 5,337 56.10
Granted 1,355 96.84
Vested (1,648) 51.30
Forfeited (526) 58.74
Outstanding at December 31, 2014 4,518 $ 69.76
Long-term Performance Plan (LTPP)
In 2004, we established the LTPP, which provides for restricted stock unit awards granted from our stock plans to our senior
leadership. These awards vest at the end of a three-year performance cycle based upon the achievement of specific pre-
established levels of performance.
The performance goals for the three outstanding performance cycles at December 31, 2014, are independent of each other
and based on three metrics, as defined in the award agreements: return on invested capital (ROIC), weighted at 50%; total
shareholder return (TSR) relative to a peer group, weighted at 25%; and cumulative free cash flow from continuing operations
(CFCF), weighted at 25%.
The ultimate award, which is determined at the end of each of the three-year performance cycles, can range from zero to
200% of the target award and also includes dividend equivalents, which are not included in the table below. Compensation
expense for the awards is recognized over the performance period based upon the value determined under the intrinsic value
method for the CFCF and ROIC portions of the award and the Monte Carlo simulation method for the TSR portion of the
award using historic volatility. Compensation expense for the CFCF and ROIC portions of the awards will be adjusted based
upon the expected achievement of those performance goals.