Stock-Based Compensation

12 Months Ended

Apr. 30, 2014

Compensation Related Costs [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Brown-Forman 2013 Omnibus Compensation Plan is our incentive compensation plan, which is designed to reward its participants (including our eligible officers, employees, and non-employee directors) for company performance. Under the Plan, we can grant stock-based incentive awards for up to 8,300,000 shares of common stock to eligible participants until July 28, 2023. As of April 30, 2014, awards for approximately 7,760,000 shares remain available for issuance under the Plan. We try to limit the source of shares delivered to participants under the Plan to treasury shares that we purchase from time to time on the open market, in private transactions, or otherwise.

The following table presents information about stock options and stock-settled stock appreciation rights (SSARs) granted under the Plan (or its predecessor plans) as of April 30, 2014, and for the year then ended:

	Number of Underlying Shares (in thousands)		Weighted Average Exercise Price per Award		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at April 30, 2013	4,587		$	37.22
Granted	414		72.42
Exercised	(919	)	29.63
Forfeited or expired	(19	)	55.23
Outstanding at April 30, 2014	4,063		$	42.44	5.1	$	193
Exercisable at April 30, 2014	2,537		$	33.31	3.6	$	143

The total intrinsic value of options and SSARs exercised during 2012, 2013, and 2014 was $29, $52, and $48, respectively.

We grant stock options and SSARs at an exercise price equal to the market price of the underlying stock on the grant date. Stock options and SSARs become exercisable after 3 years from the first day of the fiscal year of grant and expire 7 years after that date. The grant-date fair values of these awards granted during 2012, 2013, and 2014 were $9.40, $10.70, and $14.84 per award, respectively. We estimated the fair values using the Black-Scholes pricing model with the following assumptions:

	2012		2013		2014
Risk-free interest rate	1.9	%	0.9	%	1.9	%
Expected volatility	23.6	%	22.9	%	22.5	%
Expected dividend yield	1.9	%	1.9	%	1.8	%
Expected term (years)	6.00		6.50		6.75

We have also granted restricted stock units (RSUs), deferred stock units (DSUs), and shares of performance-based restricted stock (PBRS) under the Plan (or its predecessor plans). Approximately 365,000 shares underlying these awards, with a weighted-average remaining vesting period of 2.0 years, were nonvested at April 30, 2014. The following table summarizes the changes in the number of shares underlying these awards during 2014:

	Number of Underlying Shares (in thousands)		Weighted Average Fair Value at Grant Date
Nonvested at April 30, 2013	314		$	46.41
Granted	149		74.34
Adjusted for dividends or performance	30		47.65
Vested	(127	)	40.24
Forfeited	(1	)	57.40
Nonvested at April 30, 2014	365		$	60.04

For PBRS awards granted in 2014 and 2013, performance is measured based on the relative ranking of the total shareholder return of our Class B common stock during the three-year performance period compared to that of the companies within the Standard & Poor’s Consumer Staples Index at the end of the performance period, with specific payout levels ranging from 50% to 150%.

The total fair value of RSUs, PBRS awards, and DSUs vested during 2012, 2013, and 2014 was $2, $5, and $11, respectively.

The accompanying consolidated statements of operations reflect compensation expense related to stock-based incentive awards on a pre-tax basis of $9 in 2012, $11 in 2013, and $13 in 2014, partially offset by deferred income tax benefits of $4 in 2012, $4 in 2013, and $5 in 2014. As of April 30, 2014, there was $14 of total unrecognized compensation cost related to non-vested stock-based compensation. That cost is expected to be recognized over a weighted-average period of 2.6 years.