Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Stock-Based Compensation

Stock-Based Compensation

19.   Stock-Based Compensation

        We grant stock-based compensation awards under the CF Industries Holdings, Inc. 2009 Equity and Incentive Plan (the Plan). The awards granted to date are nonqualified stock options and restricted stock. The cost of employee services received in exchange for the awards is measured based on the fair value of the award on the grant date and is recognized as expense on a straight-line basis over the period during which the employee is required to provide the services.

        A summary of stock option activity under the Plan at March 31, 2012 is presented below:

	Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2012		1,215,083		$	53.95	$	111.4
Granted		1,130			182.30		—
Exercised		(165,239	)		21.10		26.1
Forfeited		(1,924	)		113.00		—
Outstanding at March 31, 2012		1,049,050			59.16		129.6
Exercisable at March 31, 2012		744,313			38.70		107.2

        Cash received from stock option exercises for the three months ended March 31, 2012 was $3.5 million.

        A summary of restricted stock activity under the Plan at March 31, 2012 is presented below:

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2012		112,571	$	100.83
Granted		380		182.30
Outstanding at March 31, 2012		112,951		101.11

        Stock-based compensation cost is recorded primarily in selling, general and administrative expense. The following table summarizes stock-based compensation costs and related income tax benefits:

	Three months ended  31,
	2012			2011
	(in millions)
Stock-based compensation expense	$	2.5		$	2.4
Income tax benefit		(1.0	)		(0.9	)
Stock-based compensation expense, net of income taxes	$	1.5		$	1.5

        As of March 31, 2012, pre-tax unrecognized compensation cost, net of estimated forfeitures, was $9.3 million for stock options, which will be recognized over a weighted average period of 1.9 years, and $5.0 million for restricted stock, which will be recognized over a weighted average period of 1.9 years.

        An excess tax benefit is generated when the realized tax benefit from the vesting of restricted stock, or a stock option exercise, exceeds the previously recognized deferred tax asset. Excess tax benefits are required to be reported as a financing cash inflow rather than as a reduction of taxes paid. Excess tax benefits for the three months ended March 31, 2012 and 2011 was $9.4 million and $6.0 million, respectively.

        In addition to the foregoing, we recognized stock-based compensation expense for TNCLP phantom units provided to non-employee directors of TNGP of $0.7 million for the three months ended March 31, 2012.