Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

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

Stock Based Compensation

STOCK-BASED COMPENSATION

In September 2014, and in connection with the formation of SunEdison Emerging Markets Yield, Inc., the Company granted restricted stock awards to various Company employees (“Participants”) under the SunEdison Emerging Markets Yield Inc. 2014 Equity Incentive Plan. The fair value of each Participant’s grant was determined by using the percentage of shares granted multiplied by the overall fair value of SunEdison’s equity in the Company. The restricted stock awards converted into shares of Class A common stock in connection the completion of the IPO. There were 20,450 shares of restricted stock issued representing a 3.1% interest in the equity of SunEdison Emerging Markets Yield, Inc. as of June 30, 2015 that were issued at a total value of $0.7 million.

In March 2015, there were 35,245 additional shares issued representing an additional 3.5% interest in the equity of TerraForm Global as of the effective date of this offering with a total value of $1.3 million.

In estimating the fair value of the restricted stock, the primary valuation considerations were an enterprise value determined from an discounted cash flow of income-based approach, using a present value of after-tax probability weighted equity cash flow of those projects expected to be included in the IPO, in a projection period extending through December 2024 and a lack of marketability discount of 10.0%. The discount model used the following assumptions: a time to liquidity event of 7 months; a discount rate of 13.0%; and volatility of 40.0% over the time to a liquidity event. Estimates of the volatility of our common stock were based on available information on the volatility of the Parent and the common stock of comparable publicly traded companies.

Subject to accelerated vesting upon certain events, 25.0% of the Class A common stock will vest on the first through fourth anniversary of the date of the IPO. Upon a termination of employment for any reason, any unvested shares of Class A common stock held by the terminated Participant will be forfeited. For the three and six months ended June 30, 2015 and 2014, no stock-based compensation expense was recognized.

During the third quarter, Global's board of directors is expected to approve a grant of restricted stock units to several persons who have provided or are expected to provide services to Global. Although the specific terms of these grants have not been finalized, these grants are expected to consist of approximately 695,200 restricted stock units, or “RSUs,” which are expected to vest in four equal annual installments commencing on the first anniversary of the IPO. The RSUs will not entitle the holders to voting rights with respect to matters presented to Global's stockholders, and holders of the RSUs will not have any right to receive dividends.