Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Stock Option and Stock Appreciation Rights Transactions

A summary of the stock option and SAR transactions for the Lorillard Plan for 2013, 2012, and 2011 is as follows:


	2013					2012					2011
	Number of Awards			Weighted Average Exercise Price		Number of Awards			Weighted Average Exercise Price		Number of Awards			Weighted Average Exercise Price
Awards outstanding, January 1,		3,434,256		$	26.95		4,388,862		$	25.94		4,428,339		$	23.19
Granted		—			—		—			—		1,026,060			34.37
Exercised		(1,404,674	)		24.10		(930,156	)		22.28		(1,040,094	)		22.65
Forfeited		—			—		(20,631	)		23.62		(25,443	)		23.72
Expired		—			—		(3,819	)		23.53		—			—

Awards outstanding, December 31		2,029,582			28.92		3,434,256			26.95		4,388,862			25.94

Awards exercisable, December 31		1,350,409			27.31		1,760,898			25.05		1,505,325			22.23

Shares available for grant, December 31		4,690,378					4,375,683					4,270,449

Information about Stock Options and Stock Appreciation Rights Outstanding in Connection with Lorillard Plan

The following table summarizes information about stock options and SARs outstanding in connection with the Lorillard Plan at December 31, 2013:


	Awards Outstanding						Awards Vested
Range of exercise prices	Number of Shares		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
$6.67 – 11.66		3,000		1.1	$	10.84		3,000	$	10.84
11.67 – 16.66		31,686		2.1		15.67		31,686		15.67
16.67 – 21.66		144,285		4.4		19.87		144,285		19.87
21.67 – 26.66		728,053		5.7		24.83		525,271		24.51
26.67 – 31.66		419,148		5.4		27.09		318,960		27.09
31.67 – 36.66		280,146		7.2		35.73		143,325		35.46
36.67 – 38.00		423,264		7.2		37.45		183,882		37.45

Fair Value of Granted Options and Stock Appreciation Rights Estimated Using Black- Scholes Pricing Model

The fair value of granted options and SARs for the Lorillard Plan was estimated at the grant date using the Black-Scholes pricing model with the following assumptions and results:


Year Ended December 31,	2011
Weighted average expected dividend yield		5.8	%
Weighted average expected implied volatility		30.0	%
Weighted average risk-free interest rate		1.5	%
Expected holding period (in years)		5.0
Weighted average fair value of awards	$	4.90

Restricted Stock Unit Activity

RSU activity was as follows for the year ended December 31, 2013:


	2013					2012
	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value		Number of Restricted Stock Units			Weighted Average Grant Date Fair Value
Outstanding, January 1,		207,339		$	42.36		—		$	—
Granted		217,216			41.63		210,891			42.36
Transferred to restricted		(192,672	)		42.35		—			—
Forfeited		(12,672	)		42.42		(3,552	)		42.35

Outstanding, December 31		219,211			41.64		207,339			42.36

Restricted Stock Activity

Restricted stock activity was as follows for the years ended December 31, 2013, 2012 and 2011:


	2013					2012					2011
	Number of Awards			Weighted- Average Grant Date Fair Value Per Share		Number of Awards			Weighted- Average Grant Date Fair Value Per Share		Number of Awards			Weighted- Average Grant Date Fair Value Per Share
Balance at January 1,		1,028,844		$	28.33		1,310,619		$	24.97		758,049		$	23.76
Granted		166,125			41.28		156,450			40.97		599,526			26.50
Transferred from RSU		179,280			42.35		—			—		—			—
Vested		(362,100	)		26.25		(396,786	)		22.27		(24,156	)		24.85
Forfeited		(18,837	)		31.49		(41,439	)		28.01		(22,800	)		24.95

Balance at December 31,		993,312			33.72		1,028,844			28.33		1,310,619			24.97

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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