Equity-Based Compensation

6 Months Ended

Jun. 30, 2013

Equity-Based Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Equity-Based Compensation

The Company recognized $2.1 million and $5.8 million in equity-based compensation expense for the three months ended June 30, 2013 and 2012, respectively, and $4.0 million and $11.5 million in equity-based compensation expense for the six months ended June 30, 2013 and 2012, respectively. Equity-based compensation expense for the three and six months ended June 30, 2012 included incremental expense of $1.7 million and $3.3 million, respectively, related to a modified Class B Common Unit grant agreement with the Company's former chief executive officer.

In June 2013, the Company adopted the 2013 Long-Term Incentive Plan (the "2013 LTIP"). The 2013 LTIP provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock and performance awards. The maximum aggregate number of shares that may be issued under the 2013 LTIP is 11,700,000 shares of the Company's common stock, in addition to the 3,798,508 shares of restricted stock granted to replace unvested B Units in connection with the Company's IPO, as discussed below.

On July 2, 2013, the Company completed an IPO of its common shares. In connection with the IPO, CDW Holdings distributed all of its shares of the Company's common stock to its existing members in accordance with their respective membership interests. Common stock received by holders of B Units in connection with the distribution is subject to any vesting provisions previously applicable to the holder's B Units. B Unit holders received 3,798,508 shares of restricted stock with respect to B Units that had not yet vested at the time of the distribution. In addition, the Company issued approximately 1.3 million stock options to the B Unit holders to preserve their fully-diluted equity ownership percentage. These options were issued with an exercise price equal to the IPO price per share and are also subject to the same vesting provisions as the B Units to which they relate. The unvested stock options and shares of restricted stock generally vest between December 31, 2014 and January 20, 2018.

Under the terms of the MPK Incentive Plan II (the "MPK Plan"), vesting accelerated for all unvested units upon completion of the IPO. The Company anticipates recording a pre-tax charge of $36.7 million related to the acceleration of the expense recognition for MPK units in the third quarter of 2013. In connection with the completion of the IPO, the Company distributed common stock to each participant and withheld the number of shares of common stock equal to the required tax withholding for each participant. In June 2013, the Company paid required withholding taxes of $23.3 million to federal and state taxing authorities. This amount is included within prepaid expenses and other on the consolidated balance sheet at June 30, 2013 and is reported as a financing activity in the consolidated statement of cash flows for the six months ended June 30, 2013. In addition, the Company paid $4.0 million of employer payroll taxes that are included as an operating activity in the consolidated statement of cash flows for the six months ended June 30, 2013.

In connection with the IPO, the Company granted approximately 1.4 million restricted stock units under the 2013 LTIP. The restricted stock units granted vest at the end of four years.

See Note 13 for additional discussion of the Company's IPO.