Toro 2013 Annual Report Download - page 64

The following table illustrates the valuation assumptions of stock- Performance Share Awards. The company grants performance
based compensation for the following fiscal years: share awards to executive officers and other employees under
which they are entitled to receive shares of the company’s com-
Fiscal years ended October 31 2013 2012 2011 mon stock contingent on the achievement of performance goals of
the company, which are generally measured over a three-year
Expected life of option in years 6 66
Expected volatility 35.18% – 35.19% 34.87% – 35.02% 33.34% – 33.43% period. The number of shares of common stock a participant
Weighted-average volatility 35.19% 35.01% 33.42% receives will be increased (up to 200 percent of target levels) or
Risk-free interest rate 0.88% 1.20% 1.72% – 2.36% reduced (down to zero) based on the level of achievement of per-
Expected dividend yield 1.04% – 1.07% 1.31% – 1.40% 1.04% – 1.16%
Weighted-average dividend yield 1.07% 1.32% 1.05% formance goals and vest at the end of a three-year period. Per-
Weighted-average fair value at formance share awards are generally granted on an annual basis
date of grant $13.03 $8.56 $10.15 in the first quarter of the company’s fiscal year. Compensation
expense is recognized for these awards on a straight-line basis
Restricted Stock and Restricted Stock Unit Awards. Under over the vesting period based on the per share fair value as of the
the company’s incentive plan, restricted stock and restricted stock date of grant and the probability of achieving each performance
unit awards are generally granted to certain non-officer employees. goal.
Occasionally, restricted stock or restricted stock unit awards may The company granted performance share awards as follows:
be granted in connection with hiring, mid-year promotions, leader-
ship transition, or retention. In fiscal 2013, the company began Fiscal years ended October 31 2013 2012 2011
granting restricted stock unit awards. Restricted stock and
Weighted-average fair value at date of grant $42.06 $28.24 $31.76
restricted stock unit awards generally vest one-third each year over Fair value of performance share awards vested 9,057 1,828 1,429
a three-year period, or vest in full on the three-year anniversary of
The table below summarizes the activity during fiscal 2013 for
the date of grant. Such awards may have performance-based
unvested performance share awards:
rather than time-based vesting requirements. Compensation
expense equal to the grant date fair value, which is equal to the
Weighted-
closing price of the company’s common stock on the date of grant
Average Fair
multiplied by the number of shares subject to the restricted stock Performance Value at Date
and restricted stock unit awards, is recognized for these awards Shares of Grant
over the vesting period. Unvested as of October 31, 2012 583,332 $26.33
The company granted restricted stock and restricted stock unit Granted 152,800 42.06
awards during the following fiscal years as follows: Vested (215,332) 20.37
Forfeited – –
Fiscal years ended October 31 2013 2012 2011 Unvested as of October 31, 2013 520,800 $33.41
Weighted-average fair value at date of grant $46.10 $33.61 $27.17 As of October 31, 2013, there was $3,497 of total unrecognized
Fair value of restricted stock and restricted compensation expense related to unvested performance share
stock unit awards vested 1,207 967 37 awards. That cost is expected to be recognized over a weighted-
The table below summarizes the activity during fiscal 2013 for average period of 1.7 years.
unvested restricted stock and restricted stock unit awards:
Weighted-
Restricted Average Fair 11 EMPLOYEE RETIREMENT PLANS
Stock and Value at Date
The company maintains The Toro Company Investment, Savings,
Units of Grant
and Employee Stock Ownership Plan for eligible employees. The
Unvested as of October 31, 2012 114,914 $30.02
company’s expenses under this plan were $14,931, $14,304, and
Granted 41,270 46.10
Vested (42,214) 28.59 $12,686 for the fiscal years ended October 31, 2013, 2012, and
Forfeited (4,682) 37.45 2011, respectively.
Unvested as of October 31, 2013 109,288 $36.32 In addition, the company and its subsidiaries have defined bene-
fit, supplemental, and other retirement plans covering certain
As of October 31, 2013, there was $1,894 of total unrecognized
employees in the U.S. and the United Kingdom. The projected
compensation expense related to unvested restricted stock and
benefit obligation of these plans as of October 31, 2013 and 2012
restricted stock unit awards. That cost is expected to be recog-
was $42,034 and $41,701, respectively, and the net liability
nized over a weighted-average period of 2.1 years.
amount recognized in the consolidated balance sheets as of Octo-
ber 31, 2013 and 2012 was $3,982 and $3,881, respectively. The
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