Share-based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock Compensation Plans

We have a share-based compensation plan, which has been approved by the stockholders, for certain employees, officers and directors. This plan is described below.

FMC Corporation Incentive Compensation and Stock Plan

The FMC Corporation Incentive Compensation and Stock Plan (the “Plan”) provides for the grant of a variety of cash and equity awards to officers, directors, employees and consultants, including stock options, restricted stock, performance units (including restricted stock units), stock appreciation rights, and multi-year management incentive awards payable partly in cash and partly in common stock. The Compensation and Organization Committee of the Board of Directors (the “Committee”), subject to the provisions of the Plan, approves financial targets, award grants, and the times and conditions for payment of awards to employees. The total number of shares of common stock authorized for issuance under the Plan is 30.2 million of which approximately 3.5 million shares of common stock are available for future grants of share based awards under the Plan as of December 31, 2019. The FMC Corporation Non-Employee Directors’ Compensation Policy, administered by the Nominating and Corporate Governance Committee of the Board of Directors, sets forth the compensation to be paid to the directors, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based restricted stock units, and cash awards to be made to directors under the Plan.

Stock options granted under the Plan may be incentive or nonqualified stock options. The exercise price for stock options may not be less than the fair market value of the stock at the date of grant. Awards granted under the Plan vest or become exercisable or payable at the time designated by the Committee, which has generally been three years from the date of grant. Incentive and nonqualified options granted under the Plan expire no later than 10 years from the grant date.

Under the Plan, awards of restricted stock and restricted stock units may be made to selected employees. The awards vest over periods designated by the Committee, which has generally been three years, with vesting conditional upon continued employment. Compensation cost is recognized over the vesting periods based on the market value of the stock on the date of the award. Restricted stock units granted to directors under the Plan vest immediately if granted as part of, or in lieu of, the annual retainer; other restricted stock units granted to directors vest at the Annual Meeting of Shareholders in the calendar year following the May 1 annual grant date (but are subject to forfeiture on a pro rata basis if the director does not serve the full year except under certain circumstances).

At December 31, 2019 and 2018, there were restricted stock units representing an aggregate of 276,145 shares and 248,465 shares of common stock, respectively, credited to the directors’ accounts.

Stock Compensation

We recognized the following stock compensation expense:


	Year Ended December 31,
(in Millions)	2019		2018		2017
Stock option expense, net of taxes of $1.5, $1.3 and $2.4 ⁽¹⁾	$	5.7	$	4.9	$	4.5
Restricted stock expense, net of taxes of $2.2, $2.3 and $3.5 ⁽²⁾	8.2		8.4		6.4
Performance based expense, net of taxes of $1.7, $1.2 and $1.5	6.3		4.4		2.8

Total stock compensation expense, net of taxes of $5.4, $4.8 and $7.4 ⁽³⁾	$	20.2	$	17.7	$	13.7

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(1) We applied an estimated forfeiture rate of 4.0% per stock option grant in the calculation of the expense.

(2) We applied an estimated forfeiture rate of 2.0% of outstanding grants in the calculation of the expense.

(3) This expense is classified as "Selling, general and administrative expenses" in our consolidated statements of income (loss). Total stock compensation expense, net of tax, not included in the above table of $0.1 million, $4.0 million, and $4.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, is included in "Discontinued operations, net of income taxes" in the consolidated statements of income (loss).

We received $50.7 million, $10.7 million and $22.5 million in cash related to stock option exercises for the years ended December 31, 2019, 2018 and 2017, respectively. The shares used for the exercise of stock options occurring during the years ended December 31, 2019, 2018 and 2017 came from treasury shares.

Impacts of Livent Distribution

On March 1, 2019, we completed the previously announced distribution of 123 million shares of common stock of Livent as a pro rata dividend on shares of FMC common stock outstanding at the close of business on the record date of February 25, 2019. All outstanding and nonvested equity awards relating to FMC’s stock immediately prior to the effective date were generally converted into FMC and Livent units pursuant to the employee matters agreement.

Stock Options

The grant-date fair values of the stock options we granted in the years ended December 31, 2019, 2018 and 2017 were estimated using the Black-Scholes option valuation model, the key assumptions for which are listed in the table below. The dividend yield assumption reflects anticipated dividends on our common stock. The expected volatility assumption is based on the actual historical experience of our common stock. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury securities with terms equal to the expected timing of stock option exercises as of the grant date. Employee stock options generally vest after a three year period and expire ten years from the date of grant.

Black Scholes valuation assumptions for stock option grants:


	2019	2018	2017
Expected dividend yield	1.83%	0.77%	1.15%
Expected volatility	26.07%	26.85%	27.04%
Expected life (in years)	6.5	6.5	6.5
Risk-free interest rate	2.53%	2.79%	2.10%

The weighted-average grant-date fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $18.66, $25.70 and $15.66 per share, respectively.

The following summary shows stock option activity for employees under the Plan for the three years ended December 31, 2019:


(Shares in Thousands)	Number of Options Granted But Not Exercised	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value (in Millions)
December 31, 2016 (1,292 shares exercisable and 1,373 shares expected to vest or be exercised)	2,749	6.1 years	$	45.34	$	37.6
Granted	370		57.63
Exercised	(590)		39.93		20.1
Forfeited	(94)		49.10
December 31, 2017 (920 shares exercisable and 1,452 shares expected to vest or be exercised)	2,435	6.3 years	$	48.37	$	112.7
Granted	250		85.19
Exercised	(260)		41.80		11.7
Forfeited	(61)		52.51
December 31, 2018 (1,044 shares exercisable and 1,287 shares expected to vest or be exercised)	2,364	6.0 years	$	52.87	$	52.5
Granted	380		75.76
Conversion impact from Livent spin ⁽¹⁾	210		53.09
Exercised	(1,414)		39.17		67.2
Forfeited	(36)		67.82
December 31, 2019 (628 shares exercisable and 835 shares expected to vest or be exercised)	1,504	6.5 years	$	58.06	$	62.8

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(1)Awards converted as a result of March 1, 2019 Livent separation.

The number of stock options indicated in the above table as being exercisable as of December 31, 2019, had an intrinsic value of $33.2 million, a weighted-average remaining contractual term of 4.2 years, and a weighted-average exercise price of $47.02.

As of December 31, 2019, we had total remaining unrecognized compensation cost related to unvested stock options of $3.9 million which will be amortized over the weighted-average remaining requisite service period of approximately 1.79 years.

Restricted and Performance Based Equity Awards

The grant-date fair value of restricted stock awards and stock units under the Plan is based on the market price per share of our common stock on the date of grant. The related compensation cost is amortized to expense on a straight-line basis over the vesting period during which the employees perform related services, which is typically three years except for those eligible for retirement prior to the stated vesting period as well as non-employee directors.

Starting in 2015, we began granting performance based restricted stock awards. The performance based share awards represent a number of shares of common stock to be awarded upon settlement based on the achievement of a total shareholder return ("TSR") relative to peer companies over a three year period. These awards generally vest upon the completion of a three year period from the date of grant; however, starting with the 2016 grants, certain performance criteria is measured on an annual basis. Starting with the 2019 grants, vesting was based on a TSR relative to peer companies and a cumulative operating cash flow metric. The fair value of the equity classified performance-based share awards is determined based on the number of shares of common stock expected to be awarded and a Monte Carlo valuation model.

The following table shows our employee restricted award activity for the three years ended December 31, 2019:


	Restricted Equity				Performance Based Equity
(Number of Awards in Thousands)	Number of awards	Weighted-Average Grant Date Fair Value Per Share		Number of awards	Weighted-Average Grant Date Fair Value Per Share
Nonvested at December 31, 2016	496	$	48.56	158	$	49.55
Granted	121	57.66		105	66.93
Vested	(98)	64.75		—	—
Forfeited	(30)	47.60		(3)	52.74
Nonvested at December 31, 2017	489	$	47.63	260	$	53.36
Granted	137	84.94		133	88.65
Vested	(154)	55.14		(58)	81.15
Forfeited	(13)	65.39		—	—
Nonvested at December 31, 2018	459	$	55.75	335	$	56.42
Granted	108	76.22		106	83.89
Conversion impact from Livent spin ⁽¹⁾	(29)	67.46		(12)	84.58
Vested	(223)	37.54		(222)	42.18
Forfeited	(13)	69.69		(1)	78.92
Nonvested at December 31, 2019	302	$	67.89	206	$	72.06

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(1)Awards transferred to Livent employees as a result of March 1, 2019 Livent separation.

As of December 31, 2019, we had total remaining unrecognized compensation cost related to unvested restricted awards of $10.0 million which will be amortized over the weighted-average remaining requisite service period of approximately 1.77 years.