EQUITY

Share Repurchase Program

On December 12, 2012, the Board of Directors authorized a repurchase program covering up to an aggregate of $50.0 million of the Company’s common stock in open market transactions and in accordance with one or more pre-arranged stock trading plans established in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The repurchase program expired on February 7, 2014. The Company's current pre-arranged stock trading plan was established on August 14, 2013 and expired February 7, 2014 and covered the repurchase of up to $36.2 million of the registrant’s common stock.

2010 Stock Plan

At December 31, 2009, the Company had outstanding stock awards under five stock incentive plans: the Entegris, Inc. 1999 Long-Term Incentive and Stock Option Plan; the Entegris, Inc. Outside Directors’ Option Plan and three former Mykrolis stock option plans assumed by the Company on August 10, 2005; the 2001 Equity Incentive Plan; the 2003 Employment Inducement and Acquisition Stock Option Plan; and the 2001 Non-Employee Director Stock Option Plan. On December 17, 2009, the Company’s Board of Directors approved the 2010 Stock Plan, subject to the approval of the Company’s stockholders. On May 5, 2010, the stockholders approved the 2010 Stock Plan. The 2010 Stock Plan replaced the above existing plans for future stock awards and stock option grants. Subsequent to the replacement of the prior plans on May 5, 2010, no awards were or will be made under the prior plans.

The 2010 Stock Plan provides for the issuance of stock options and other share-based awards to selected employees, directors, and other individuals or entities that provide services to the Company or its affiliates. The 2010 Stock Plan has a term of ten years. Under the 2010 Stock Plan, the Board of Directors or a committee selected by the Board of Directors will determine for each award, the term, price, number of shares, rate at which each award is exercisable and whether restrictions are imposed on the shares subject to the awards. The exercise price for option awards generally may not be less than the fair market value per share of the underlying common stock on the date granted. The 2010 Stock Plan allows that after December 31, 2009 any stock awards that were awarded from the expired plans mentioned above that are forfeited, expired or otherwise terminated without issuance of such stock award again be available for issuance under the 2010 Stock Plan.

General Option Information

Option activity for the 2010 Stock Plan and predecessor plans for the years ended December 31, 2013, 2012 and 2011 is summarized as follows:



	2013				2012				2011
(Shares in thousands)	Number of shares		Weighted average exercise price		Number of shares		Weighted average exercise price		Number of shares		Weighted average exercise price
Options outstanding, beginning of year	2,565		$	8.20	3,561		$	6.53	5,001		$	6.25
Granted	553		9.88		470		9.27		511		8.75
Exercised	(786	)	7.54		(1,293	)	3.76		(1,698	)	5.95
Expired or Forfeited	(371	)	12.10		(173	)	9.83		(253	)	9.41
Options outstanding, end of year	1,961		$	8.20	2,565		$	8.20	3,561		$	6.53
Options exercisable, end of year	1,001		$	6.92	1,828		$	8.18	2,078		$	7.53

Options outstanding for the Company’s stock plans at December 31, 2013 are summarized as follows:



(Shares in thousands)	Options outstanding				Options exercisable
Range of exercise prices	Number outstanding	Weighted average remaining life in years	Weighted- average exercise price		Number exercisable	Weighted average exercise price
$1.13 to $8.37	684	1.9 years	$	5.67	684	$	5.67
$8.47 to $9.27	642	4.6 years	9.00		235	8.90
$9.40 to $14.50	635	5.4 years	10.11		82	11.65
	1,961	3.9 years	8.20		1,001	6.92

The weighted average remaining contractual term for options outstanding and exercisable for all plans at December 31, 2013 was 3.9 years and 2.4 years, respectively.

For all plans, the Company had shares available for future grants of 6.8 million shares, 7.7 million shares, and 8.6 million shares at December 31, 2013, 2012 and 2011, respectively.

For all plans, the total pre-tax intrinsic value of stock options exercised during the years ended December 31, 2013 and 2012 was $1.8 million and $6.7 million, respectively. The aggregate intrinsic value, which represents the total pre-tax intrinsic value based on the Company’s closing stock price of $11.59 at December 31, 2013, which theoretically could have been received by the option holders had all option holders exercised their options as of that date, was $6.7 million and $4.8 million for options outstanding and options exercisable, respectively.

Employee Stock Purchase Plan

The Company maintains the Entegris, Inc. Employee Stock Purchase Plan (ESPP). A total of 4.0 million common shares are reserved for issuance under the ESPP. The ESPP allows employees to elect, at six-month intervals, to contribute up to 10% of their compensation, subject to certain limitations, to purchase shares of common stock at a discount of 15% from the fair market value on the first day or last day of each six-month period. The Company treats the ESPP as a compensatory plan. As of December 31, 2013, 3.5 million shares had been issued under the ESPP. At December 31, 2013, 0.5 million shares remained available for issuance under the ESPP. Employees purchased 0.2 million shares, 0.3 million shares, and 0.4 million shares, at a weighted-average price of $8.00, $7.34, and $4.35 during the years ended December 31, 2013, 2012 and 2011, respectively.

The table below sets forth the amount of cash received by the Company from the exercise of stock options and employee contributions to the ESPP during the years ended December 31, 2013, 2012 and 2011:



(In thousands)	2013		2012		2011
Exercise of stock options and employee contributions to the ESPP	$	7,685	$	7,431	$	11,690

Restricted Stock Awards

Restricted stock awards are awards of common stock made under the 2010 Stock Plan that are subject to restrictions on transfer and to a risk of forfeiture if the awardee terminates employment with the Company prior to the lapse of the restrictions. The value of such stock is determined using the market price on the grant date. Compensation expense for restricted stock awards is generally recognized using the straight-line single-option method. A summary of the Company’s restricted stock activity for the years ended December 31, 2013, 2012 and 2011 is presented in the following table:



	2013				2012				2011
(Shares in thousands)	Number of shares		Weighted average grant date fair value		Number of shares		Weighted average grant date fair value		Number of shares		Weighted average grant date fair value
Unvested, beginning of year	1,802		$	7.02	2,298		$	5.49	2,738		$	4.43
Granted	717		9.85		744		9.21		795		8.65
Vested	(871	)	5.67		(1,132	)	5.42		(1,087	)	5.22
Forfeited	(78	)	8.66		(108	)	6.22		(148	)	4.89
Unvested, end of year	1,570		$	8.98	1,802		$	7.02	2,298		$	5.49

The weighted average remaining contractual term for unvested restricted shares at December 31, 2013 and 2012 was 2.0 years and 1.8 years, respectively.

As of December 31, 2013, the total compensation cost related to unvested stock options and restricted stock awards not yet recognized was $3.1 million and $9.8 million, respectively, and is expected to be recognized over the next 2.4 years on a weighted-average basis.

Valuation and Expense Information

The Company recognizes compensation expense for all share-based payment awards made to employees and directors based on their estimated fair values on the date of grant. Share-based compensation expense is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period.The following table summarizes the allocation of share-based compensation expense related to employee stock options, restricted stock awards and grants under the employee stock purchase plan accounted for under ASC 718 for the years ended December 31, 2013, 2012 and 2011:



(In thousands)	2013		2012		2011
Cost of sales	$	690	$	575	$	650
Engineering, research and development expenses	502		500		566
Selling, general and administrative expenses	6,736		8,806		6,303
Share-based compensation expense	7,928		9,881		7,519
Tax benefit	2,643		3,686		2,805
Share-based compensation expense, net of tax	$	5,285	$	6,195	$	4,714

Stock Options

Share-based payment awards in the form of stock option awards for 0.6 million, 0.5 million and 0.5 million options were granted to employees during the years ended December 31, 2013, 2012, and 2011. Compensation expense is based on the grant date fair value. The awards vest annually over a three-year or four-year period and have a contractual term of seven years. The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, the risk-free rate and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of reasonableness of the original estimates of fair value made by the Company.

The fair value of each stock option grant was estimated at the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used in the valuation and the resulting weighted-average fair value per option granted for the years ended December 31, 2013, 2012 and 2011:



Employee stock options:	2013			2012			2011
Volatility	51.7		%	82.4		%	79.3		%
Risk-free interest rate	0.7		%	0.6		%	1.8		%
Dividend yield	—		%	—		%	—		%
Expected life (years)	3.6			3.8			4.0
Weighted average fair value per option	$	3.80		$	5.42		$	5.14

A historical daily measurement of volatility is determined based on the expected life of the option granted. The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the expected life of the option granted. Expected life is determined by reference to the Company’s historical experience. The Company determines the dividend yield by dividing the expected annual dividend on the Company’s stock by the option exercise price.

Shareholder Rights Plan On July 27, 2005, the Company’s Board of Directors adopted a shareholder rights plan (the “Rights Plan”) pursuant to which Entegris declared a dividend on August 8, 2005 to its shareholders of record on that date of one preferred share purchase right (a “Right”) for each share of Entegris common stock owned on August 8, 2005 and authorized the issuance of Rights in connection with future issuances of Entegris common stock. Each Right entitles the holder to purchase one-hundredth of a share of a series of preferred stock at an exercise price of $50, subject to adjustment as provided in the Rights Plan. The Rights Plan is designed to protect Entegris’ shareholders from attempts by others to acquire Entegris on terms or by using tactics that could deny all shareholders the opportunity to realize the full value of their investment. The Rights are attached to the shares of the Company’s common stock until certain triggering events specified in the Rights Agreement occur, including, unless approved by the Company’s Board of Directors, an acquisition by a person or group of specified levels of beneficial ownership of Entegris common stock or a tender offer for Entegris common stock. Upon the occurrence of any of these triggering events, the Rights authorize the holders to purchase at the then-current exercise price for the Rights, that number of shares of the Company’s common stock having a value equal to twice the exercise price. The Rights are redeemable by the Company for $0.01 and will expire on August 8, 2015. One of the events which will trigger the Rights is the acquisition, or commencement of a tender offer, by a person (an Acquiring Person, as defined in the shareholder rights plan), other than Entegris or any of its subsidiaries or employee benefit plans, of 15% or more of the outstanding shares of the Company’s common stock. An Acquiring Person may not exercise a Right.