Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

18.   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 September 30, 2012 is presented below:

	Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2011		1,215,083		$	53.95	$	111.4
Granted		130,670			207.11		—
Exercised		(484,788	)		26.29		79.9
Forfeited		(6,762	)		112.29		—
Outstanding at September 30, 2012		854,203			92.62		110.7
Exercisable at September 30, 2012		558,920			59.52		90.9

        Cash received from stock option exercises for the nine months ended September 30, 2012 was $12.6 million.

        A summary of restricted stock activity under the Plan at September 30, 2012 is presented below:

	Shares			Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2011		112,571		$	100.83
Granted		25,662			201.22
Vested		(37,779	)		95.35
Outstanding at September 30, 2012		100,454			128.54

        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 September 30,						Nine months ended September 30,
	2012			2011			2012			2011
	(in millions)
Stock-based compensation expense(1)	$	2.9		$	2.6		$	8.0		$	7.3
Income tax benefit		(1.1	)		(1.0	)		(3.0	)		(2.7	)
Stock-based compensation expense, net of income taxes	$	1.8		$	1.6		$	5.0		$	4.6

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In addition to our expense associated with the Plan, TNCLP also recognizes stock-based compensation expense for phantom units provided to non-employee directors of TNGP. The expense resulting from these market based liability awards amounted to $0.2 million and $0.8 million for the three and nine months ended September 30, 2012, respectively. Stock compensation expense reported in our consolidated statements of operations and consolidated statements of cash flows includes this phantom unit expense.

        As of September 30, 2012, pre-tax unrecognized compensation cost, net of estimated forfeitures, was $15.6 million for stock options, which will be recognized over a weighted average period of 2.3 years, and $7.3 million for restricted stock, which will be recognized over a weighted average period of 2.1 years.

        Excess tax benefits for the three and nine months ended September 30, 2012 were $14.6 million and $30.0 million, respectively. Excess tax benefits for the three and nine months ended September 30, 2011 were $7.1 million and $25.7 million, respectively.