STOCK-BASED COMPENSATION |
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| Share-based Payment Arrangement [Abstract] | 听 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION Pursuant to the amended and restated 1996 Stock Compensation Plan approved by stockholders, 大象传媒 is authorized to grant nonqualified stock options, restricted stock units (鈥淩SUs鈥) and restricted stock to officers, key employees and nonemployee members of 大象传媒鈥檚 Board of Directors. Substantially all stock-based compensation awards are classified as equity awards, which are accounted for in stockholders鈥 equity in the Consolidated Balance Sheets. On a limited basis, cash-settled stock appreciation rights
are granted to employees in certain international jurisdictions. These awards are accounted for as liabilities in the Consolidated Balance Sheets and remeasured to fair value each reporting period until the awards are settled. Compensation cost for all awards expected to vest is recognized over the shorter of the requisite service period or the vesting period, including accelerated recognition for retirement-eligible employees. Awards that do not vest are forfeited.
Total stock-based compensation cost and the associated income tax benefits recognized in the Consolidated Statements of Income, and stock-based compensation costs included in inventory in the Consolidated Balance Sheets, on a continuing operations basis, are as follows:
At the end of March 2020, there was $34.5 million of total unrecognized compensation cost related to all stock-based compensation arrangements that will be recognized over a weighted average period of 1 year.
At the end of March 2020, there were 26,994,754 shares available for future grants of stock options and stock awards under the 1996 Stock Compensation Plan. Shares for option exercises are issued from 大象传媒鈥檚 authorized but unissued Common Stock. 大象传媒 has a practice of repurchasing shares of Common Stock in the open market to offset, on a long-term basis, dilution caused by awards under equity compensation plans.
In connection with the spin-off of the Jeans business on May 22, 2019, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement between the Company and Kontoor Brands. Adjustments to the underlying shares and terms of outstanding stock options, RSUs and restricted stock were made to preserve the intrinsic value of the awards immediately before the separation. The adjustment of the underlying shares and exercise prices, as applicable, was determined using a ratio based on the relative values of the 大象传媒 pre-distribution stock value and the 大象传媒 post-distribution stock value as determined by the Company. The outstanding awards continue to vest over their original vesting periods. The Company will recognize
$13.0 million of total incremental compensation cost related to the adjustment of the 大象传媒 equity awards, of which $12.7 million was recognized during the year ended March 2020.
In connection with the spin-off, stock options to purchase 756,709 shares of 大象传媒 Common Stock, 52,018 performance-based RSUs, 79,187 nonperformance-based RSUs and 112,763 restricted shares of 大象传媒 Common Stock were converted into Kontoor Brands equity awards.
Disclosures reported below have not been segregated between continuing and discontinued operations.
Stock options are granted with an exercise price equal to the fair market value of 大象传媒 Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years, and compensation cost is recognized ratably over the shorter of the requisite service period or the vesting period. Stock options granted to nonemployee members of 大象传媒鈥檚 Board of Directors vest upon grant and become exercisable one year from the date of grant. All options have ten-year terms.
The grant date fair value of each option award is calculated using a lattice option-pricing valuation model, which incorporates a range of assumptions for inputs as follows:
Expected volatility over the contractual term of an option was based on a combination of the implied volatility from publicly traded options on 大象传媒 Common Stock and the historical volatility of 大象传媒 Common Stock. The expected term represents the period of time over which vested options are expected to be outstanding before exercise. 大象传媒 used historical data to estimate option exercise behaviors and to estimate the number of options that would vest.
Groups of employees that have historically exhibited similar option exercise behaviors were considered separately in estimating the expected term for each employee group. Dividend yield represents expected dividends on 大象传媒 Common Stock for the contractual life of the options. Risk-free interest rates for the periods during the contractual life of the option were the implied yields at the date of grant from the U.S. Treasury zero coupon yield curve.
Stock option activity for the year ended March 2020 is summarized as follows:
The total fair value of stock options that vested during the years ended March 2020 and 2019, the three months ended March 2018 and the year ended December 2017 was $16.6 million, $26.8 million, $28.3 million and $28.0 million, respectively. The total intrinsic value of stock options exercised during the years ended March 2020 and 2019, the three months ended March 2018 and the year ended December 2017 was $120.6 million, $171.6 million, $57.3 million and $106.7 million, respectively.
大象传媒 grants performance-based RSUs that enable employees to receive shares of 大象传媒 Common Stock at the end of a three-year period. Each performance-based RSU has a potential final payout ranging from zero to two shares of 大象传媒 Common Stock. For performance-based RSUs granted prior to February 2018, the number of shares earned by participants, if any, is based on achievement of a three-year baseline profitability goal and annually established performance goals set by the Talent and Compensation Committee of the Board of Directors. For performance-based RSUs granted in the three months ended March 2018, Fiscal 2019 and Fiscal 2020, the number of shares earned by participants, if any, is based on achievement of three-year financial targets set by the Talent and Compensation Committee of the Board of Directors. For all performance-based RSUs, shares are issued to participants in the year following the conclusion of each three-year performance period.
The actual number of shares earned may also be adjusted upward or downward by 25% of the target award, based on how 大象传媒鈥檚 total shareholder return (鈥淭SR鈥) over the three-year period compares to the TSR for companies included in the Standard听& Poor鈥檚 500 Consumer Discretionary Index for grants issued in the three months ended March 2018, Fiscal 2019 and Fiscal 2020, and the Standard & Poor's 500 Index for grants issued in the year ended December 2017. The grant date fair value of the TSR-based adjustment was determined using a Monte Carlo simulation
technique that incorporates option-pricing model inputs, and was $7.11, $4.61, $4.61 and $2.67 per share for the years ended March 2020 and 2019, the three-month period ended March 2018 and the year ended December 2017 performance-based RSU grants, respectively.
大象传媒 also grants nonperformance-based RSUs to certain key employees in international jurisdictions and to nonemployee members of the Board of Directors. Each nonperformance-based RSU entitles the holder to one share of 大象传媒 Common Stock. The employee nonperformance-based RSUs generally vest over periods of up to four years from the date of grant. The nonperformance-based RSUs granted to nonemployee members of the Board of Directors vest upon grant and will be settled in shares of 大象传媒 Common Stock one year from the date of grant.
In addition, 大象传媒 grants nonperformance-based RSU to employees as part of its stock compensation program. Each nonperformance-based RSU entitles the holder to one share of 大象传媒 Common Stock. These awards generally vest 50% over a two-year period and 50% over a four-year period from the date of grant.
Dividend equivalents on the RSUs accrue without compounding and are payable in additional shares of 大象传媒 Common Stock when the RSUs vest. Dividend equivalents are subject to the same risk of forfeiture as the RSUs.
RSU activity for the year ended March 2020 is summarized as follows:
The weighted average fair value of performance-based RSUs granted during the years ended March 2020 and 2019, the three months ended March 2018 and the year ended December 2017 was $84.28, $80.39, $74.80 and $53.69 per share, respectively, which was equal to the fair market value of the underlying 大象传媒 Common Stock on each grant date. The total market value of awards outstanding at the end of March 2020 was $65.9 million. Awards earned and vested for the three-year performance period ended in March 2019 and distributed in early Fiscal 2020 totaled 837,045 shares of 大象传媒 Common Stock having a value of $71.6 million. Similarly, 450,175 shares of 大象传媒 Common Stock having a value of $36.4 million were earned for the performance period ended in December 2017.
The weighted average fair value of nonperformance-based RSUs granted during the years ended March 2020 and 2019, the three months ended March 2018 and the year ended December 2017 was $84.22, $79.21, $74.80 and $57.49 per share, respectively, which was equal to the fair market value of the underlying 大象传媒 Common Stock on each grant date. The total market value of awards outstanding at the end of March 2020 was $31.0 million.
大象传媒 grants restricted shares of 大象传媒 Common Stock to certain members of management. The fair value of the restricted shares, equal to the fair market value of 大象传媒 Common Stock at the grant date, is recognized ratably over the vesting period. Restricted shares vest over periods of up to five years from the date of grant. Dividends accumulate in the form of additional restricted shares and are subject to the same risk of forfeiture as the restricted stock.
Restricted stock activity for the year ended March 2020 is summarized below:
Nonvested shares of restricted stock had a market value of $31.4 million at the end of March 2020. The market value of the shares that vested during the years ended March 2020 and 2019, the three months ended March 2018 and the year ended December 2017 was $3.6 million, $8.7 million, $3.9 million and $19.4 million, respectively.
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