XML 99 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCK-BASED COMPENSATION
 12 Months Ended
Jun. 30, 2012
STOCK-BASED COMPENSATION

NOTE 14. STOCK-BASED COMPENSATION

Incentive Equity Awards. The Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan (the “2007 Plan”) provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock awards, stock bonuses and performance compensation awards to employees, non-employee directors, and other key individuals who perform services for the Company. The Company accounts for stock-based compensation in accordance with ASC No. 718 which requires the measurement of stock-based compensation expense to be recognized in Net earnings based on the fair value of the award on the date of grant. In accordance with the 2007 Plan, the Company’s stock-based compensation consists of the following:

Stock Options: Stock options are granted to employees at exercise prices equal to the fair market value of the Company’s common stock on the dates of grant. Stock options are generally issued under a graded vesting schedule, generally vest ratably over five years and have a term of 10 years. Compensation expense for stock options is recognized over the requisite service period for each separately vesting portion of the stock option award.

Time-based Restricted Stock: The Company has a time-based restricted stock program under which shares of common stock have been issued to certain key employees. These shares are restricted as to transfer and in certain circumstances must be returned to the Company at the original purchase price. The Company records stock compensation expense relating to the issuance of time-based restricted stock over the period during which the transfer restrictions exist, which is up to five years from the date of grant. The value of the Company’s time-based restricted stock, based on market prices, is recognized as compensation expense over the restriction period on a straight-line basis. There are no shares of time-based restricted stock outstanding at June 30, 2012.

Performance-based Restricted Stock: The Company has a performance-based restricted stock program under which shares of common stock will be issued to certain key employees upon the achievement, by the Company, of specific performance metrics. When it is probable that the performance metrics will be achieved, the Company records stock compensation expense for performance-based restricted stock on a straight-line basis over the performance period, plus a subsequent vesting period, which typically totals approximately two and one-half years from the date of grant. Certain performance-based equity awards granted to non-U.S. employees are to be settled in cash. The Company records a liability for these performance-based equity awards. The liability and the corresponding stock compensation expense are adjusted to reflect the Company’s closing stock price as of the end of each reporting period. There are no shares of performance-based restricted stock outstanding at June 30, 2012.

Time-based Restricted Stock Units: The Company has a time-based restricted stock unit (“RSU”) program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. Time-based RSUs typically vest two and one-half years from the date of grant. The Company records stock compensation expense for time-based RSUs on a straight-line basis over the vesting period.

Performance-based Restricted Stock Units: The Company has a performance-based RSU program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. RSUs vest upon the achievement, by the Company, of specific performance metrics. The Company records stock compensation expense for performance-based RSUs on a straight-line basis over the performance period, plus a subsequent vesting period, which typically totals approximately two and one-half years from the date of grant.

 

The activity related to the Company’s incentive equity awards for the fiscal years ended June 30, 2012, 2011 and 2010 consisted of the following:

 

     Stock Options      Time-based
RSUs		      Performance-based
RSUs		  
     Number
of
Options		     Weighted
Average
Exercise
Price		      Number
of
Shares		     Weighted
Average
Grant-Date
Fair Value		      Number
of
Shares		     Weighted
Average
Grant-Date
Fair Value		  

Balances at July 1, 2009

      18,659,152      $ 18.86         1,958,112      $ 16.35         533,400      $ 15.72   

Granted

      1,751,500        22.94         1,005,598        18.65         407,043        18.64   

Exercised(a)

      (2,905,972 )      18.46         —          —           —          —     

Vesting of RSUs(b)

      —          —           (982,805 )      17.88         (266,634 )      18.34   

Expired/forfeited

      (135,468 )      19.93         (96,735 )      21.51         (2,950 )      16.27   
  

 

 

       

 

 

       

 

 

    

Balances at June 30, 2010

      17,369,212      $ 19.33         1,884,170      $ 16.52         670,859      $ 16.45   

Granted

      284,150        22.53         1,044,004        21.59         359,253        21.64   

Exercised(a)

      (2,488,648 )      19.22         —             —          —     

Vesting of RSUs(b)

      —          —           (901,654 )      14.22         (321,388 )      14.03   

Expired/forfeited

      (1,389,988 )      24.05         (94,517 )      19.40         —          —     
  

 

 

       

 

 

       

 

 

    

Balances at June 30, 2011

      13,774,726      $ 18.94         1,932,003      $ 20.19         708,724      $ 20.18   

Granted

      1,057,538        24.01         1,142,616        18.37         342,628        17.61   

Exercised(a)

      (2,151,613 )      18.52         —          —           —          —     

Vesting of RSUs(b)

      —          —           (887,892 )      18.68         (279,028 )      18.68   

Expired/forfeited

      (299,163 )      20.03         (161,158 )      19.91         (69,129 )      18.73   
  

 

 

       

 

 

       

 

 

    

Balances at June 30, 2012(c)

      12,381,488      $ 19.42         2,025,569      $ 19.61         703,195      $ 20.39   
  

 

 

       

 

 

       

 

 

    

 

(a) Stock options exercised during the fiscal years ended June 30, 2012, 2011 and 2010 had intrinsic values of $9.7 million, $8.7 million and $10.1 million, respectively.

 

(b) Time-based restricted stock units that vested during the fiscal years ended June 30, 2012, 2011 and 2010 had a total fair value of $20.9 million, $20.6 million and $20.8 million, respectively. Performance-based restricted stock units that vested during the fiscal years ended June 30, 2012, 2011 and 2010 had a total fair value of $6.7 million, $7.4 million and $5.7 million, respectively.

 

(c) As of June 30, 2012, the Company’s outstanding “in the money” stock options using the fiscal year-end share price of $21.27 (approximately 8.3 million shares) had an aggregate intrinsic value of $30.3 million. As of June 30, 2012, time-based restricted stock units and performance-based restricted stock units expected to vest using the fiscal year-end share price of $21.27 (approximately 2.0 million and 0.6 million shares, respectively) had an aggregate intrinsic value of $42.2 million and $12.1 million, respectively.

 

The tables below summarizes information regarding the Company’s outstanding and exercisable stock options as of June 30, 2012:

 

     Outstanding Options  
     Options
Outstanding		      Weighted
Average
Remaining
Contractual
Life		      Weighted
Average
Exercise
Price		  

Range of Exercise Prices

         

$0.01 to $14.00

      760,756         4.13       $ 13.80   

$14.01 to $16.00

      1,318,713         2.87       $ 15.71   

$16.01 to $18.00

      2,090,179         3.19       $ 17.34   

$18.01 to $20.00

      3,488,451         3.94       $ 18.76   

$20.01 to $22.00

      2,051,082         6.79       $ 21.42   

$22.01 to $24.00

      1,318,420         6.84       $ 22.93   

$24.01 to $26.00

      1,353,887         9.05       $ 24.65   
  

 

 

        
     12,381,488         5.05       $ 19.42   
  

 

 

        

 

     Exercisable Options  

Range of Exercise Prices

    Options
Exercisable		      Weighted
Average
Remaining
Contractual
Life		      Weighted
Average
Exercise
Price		  

$0.01 to $14.00

      733,356         4.04       $ 13.80   

$14.01 to $16.00

      1,318,713         2.87       $ 15.71   

$16.01 to $18.00

      2,065,379         3.15       $ 17.34   

$18.01 to $20.00

      3,438,211         3.92       $ 18.76   

$20.01 to $22.00

      1,633,777         6.65       $ 21.35   

$22.01 to $24.00

      1,026,262         6.46       $ 22.95   

$24.01 to $26.00

      255,549         7.61       $ 25.67   
  

 

 

        
     10,471,247         4.41       $ 18.73   
  

 

 

        

Stock-based compensation expense of $28.3 million, $30.0 million, and $27.3 million was recognized in earnings from continuing operations in the Consolidated Statements of Earnings for the fiscal years ended June 30, 2012, 2011 and 2010, respectively, as well as related tax benefits of $10.4 million, $11.3 million, and $10.4 million, respectively.

As of June 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options and RSU awards amounted to $5.1 million and $25.9 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 3.2 years and 1.5 years, respectively.

The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30, 2012, 2011 and 2010:

 

     Fiscal Year Ended
June 30, 2012		      Fiscal Year Ended
June 30, 2011		      Fiscal Year Ended
June 30, 2010		  

Risk-free interest rate

      1.4%         3.1%         2.9% - 3.2%   

Dividend yield

      2.6%         2.7%         2.5% - 2.6%   

Weighted-average volatility factor

      28.1%         31.4%         32.1% - 33.0%   

Weighted-average expected life (in years)

      6.6         7.1         6.1 - 6.9   

Weighted-average fair value (in dollars)

      $    5.01         $    6.07         $    6.00