QUICKSILVER STOCKHOLDERS’ EQUITY

Common Stock, Preferred Stock and Treasury Stock

We are authorized to issue 400 million shares of common stock with a $0.01 par value per share and 10 million shares of preferred stock with a $0.01 par value per share. At December 31, 2013, we had 177.3 million shares of common stock outstanding.

The following table shows common share and treasury share activity since January 1, 2011:



	Common Shares Issued	Treasury Shares Held
Balance at January 1, 2011	175,524,816	5,050,450
Stock options exercised	209,221	—
Restricted stock activity	1,246,446	329,252
Balance at December 31, 2011	176,980,483	5,379,702
Stock options exercised	1,572	—
Restricted stock activity	2,033,063	541,400
Balance at December 31, 2012	179,015,118	5,921,102
Stock options exercised	—	—
Restricted stock activity	4,979,761	777,538
Balance at December 31, 2013	183,994,879	6,698,640

Quicksilver Stockholder Rights Plan

In 2003, our Board of Directors declared a dividend distribution of one preferred share purchase right for each share of common stock then outstanding. Pursuant to the amendments entered into on March 8, 2013, each right, when it becomes exercisable, entitles stockholders to buy one one thousandth of a share of Quicksilver’s Series A Junior Participating Preferred Stock at an exercise price of $10, subject to customary anti-dilution adjustments.

The rights will be exercisable only if such a person or group acquires 15% or more of our common stock or announces a tender offer the consummation of which would result in ownership by such a person or group (an “Acquiring Person”) of 15% or more of our common stock. This 15% threshold does not apply to certain members of the Darden family and affiliated entities (the "Darden Entities"), which collectively owned, directly or indirectly, approximately 30% of our common stock at February 28, 2014, so long as the Darden Entities do not acquire beneficial ownership of additional shares of our common stock, subject to certain exceptions and subject to the Darden Entities, collectively, being able to acquire additional shares of common stock to maintain the Darden Entities' collective percentage ownership in us.

If an Acquiring Person acquires 15% or more of our outstanding common stock (or any Darden Entity exceeds the thresholds applicable to the Darden Entities), each right (other than the rights of the Acquiring Person, including, if applicable, the Darden Entities) will entitle its holder to purchase, at the right's then-current exercise price, a number of our common shares having a market value of twice such price. If we are acquired in a merger or other business combination transaction after an Acquiring Person has acquired 15% or more of our outstanding common stock (or any Darden Entity has exceeded the thresholds applicable to the Darden Entities), each right (other than the rights of the Acquiring Person, including, if applicable, the Darden Entities) will entitle its holder to purchase, at the right's then-current exercise price, a number of the acquiring company's common shares having a market value of twice such price.

Prior to the acquisition by an Acquiring Person of beneficial ownership of 15% or more of our common stock (or any Darden Entity exceeds the thresholds applicable to the Darden Entities), the rights are redeemable for $0.01 per right at the option of our Board of Directors.

The rights plan will expire by its terms on March 11, 2016.

Stock-Based Compensation

2006 Equity Plan

In 2006, our Board of Directors and our stockholders approved the 2006 Equity Plan, under which 14 million shares of common stock were reserved for issuance as grants of stock options, appreciation rights, restricted shares, restricted stock units, performances shares, performance units and senior executive plan bonuses. In May 2009, our stockholders approved an amendment to the 2006 Equity Plan, which increased the number of shares available for issuance after such date to 15 million. On May 15, 2013, our stockholders approved an amendment to the 2006 Equity Plan, which increased the shares available for issuance under the plan by 12 million shares. Our executive officers, other employees, consultants and non-employee directors are eligible to participate in the 2006 Equity Plan. Options reflect an exercise price of no less than the fair market value on the date of grant and have a term that expires ten years from the date of grant. At December 31, 2013 and 2012, 15.4 million shares and 9.7 million shares, respectively, were available for issuance under the 2006 Equity Plan.

Stock Options

The following summarizes the values from and assumptions for the Black-Scholes option pricing model:



	2013	2012	2011
Weighted average grant date fair value	$1.05	$4.21	$9.16
Weighted average risk-free interest rate	1.31%	1.14%	2.38%
Expected life	4.9 years	6.0 years	6.0 years
Weighted average volatility	68.97%	68.20%	66.77%
Expected dividends	—	—	—

The following table summarizes our stock option activity for 2013:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(In years)	(In thousands)
Outstanding at January 1, 2013	4,979,980		$	10.23
Granted	2,037,467		1.95
Exercised	—		—
Canceled	(85,004	)	6.63
Expired	(160,865	)	8.86
Outstanding at December 31, 2013	6,771,578		$	7.82	6.4	$	—
Exercisable at December 31, 2013	4,576,677		$	9.30	5.3	$	—

We estimate that a total of 6.3 million stock options will become vested including those options already exercisable. The unexercised options have a weighted average exercise price of $8.24 and a weighted average remaining contractual life of 6.2 years.

As of December 31, 2013 the unrecognized compensation cost related to outstanding unvested options was $2.1 million, which is expected to be recognized in expense through August 2016. Compensation expense related to stock options of $3.9 million, $7.4 million and $7.0 million was recognized for 2013, 2012 and 2011, respectively. The income tax benefit recognized in income, prior to any tax valuation allowance consideration, related to this compensation expense during 2013 and 2012 was $1.3 million and $2.4 million, respectively. The total intrinsic value of options exercised during 2012 and 2011 was $0.1 million and $1.2 million, respectively. No options were exercised in 2013.

Restricted Stock and Stock Units

The following table summarizes our restricted stock and stock unit activity for 2013:



	Payable in shares				Payable in cash
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2013	3,099,135		$	8.48	678,217		$	7.71
Granted	6,511,441		2.76		1,483,306		2.81
Vested	(2,524,332	)	6.69		(284,406	)	8.51
Canceled	(1,418,154	)	3.68		(304,776	)	3.86
Outstanding at December 31, 2013	5,668,090		$	3.90	1,572,341		$	3.69

As of December 31, 2013, the unrecognized compensation cost related to outstanding unvested restricted stock and RSUs was $13.3 million, which is expected to be recognized through December 2016. Grants of restricted stock and RSUs during 2013 had an estimated grant date fair value of $22.1 million. The fair value of RSUs to be settled in cash was $4.8 million and $1.9 million during 2013 and 2012, respectively. For 2013, 2012 and 2011, compensation expense related to restricted stock and RSUs of $16.8 million, $15.7 million and $13.9 million, respectively, was recognized. The income tax benefit recognized in income, prior to any tax valuation allowance consideration, related to this compensation expense was $5.2 million during each of 2013 and 2012. The total fair value of shares vested during 2013, 2012 and 2011 was $7.1 million, $16.3 million and $13.6 million, respectively.

In 2013, we recognized $2.4 million in stock-based compensation to correct for assumptions on forfeitures and vesting for retirement eligible and imminently retirement eligible individuals, which pertain to periods before 2013.

Accumulated Other Comprehensive Income

At December 31, 2013, AOCI included $94.5 million, net of tax, and $15.4 million for derivatives and foreign currency translation, respectively. At December 31, 2012, AOCI included $141.4 million, net of tax, and $20.1 million for derivatives and foreign currency translation, respectively.