Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Stock-Based Compensation

Stock-Based Compensation

Note 8—Stock-Based Compensation

In May 2009, the Company adopted the 2009 Stock Purchase and Option Plan (the “2009 Option Plan”) for Key Employees of the Company and its subsidiaries.  The Company continues to maintain the 2000 Stock Purchase and Option Plan (the “2000 Option Plan”).  No additional options can be granted under the 2000 Option Plan.  The 2009 Option Plan authorizes the granting of additional stock options by a committee of the Company’s Board of Directors. As of March 31, 2013, there were 5,026,370 shares of common stock available for the granting of additional stock options under the 2009 Option Plan. Options granted under the 2000 Option Plan and the 2009 Option Plan generally vest ratably over a period of five years and are generally exercisable over a period of ten years from the date of grant.

In 2004, the Company adopted the 2004 Stock Option Plan for Directors of Amphenol Corporation (the “Directors Option Plan”). The Directors Option Plan is administered by the Company’s Board of Directors.  As of March 31, 2013, the maximum number of shares of common stock available for the granting of additional stock options under the Directors Option Plan was 70,000, although no additional options are expected to be granted under this plan.  Options granted under the Directors Option Plan generally vest ratably over a period of three years and are generally exercisable over a period of ten years from the date of grant.

In May 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “Directors Restricted Stock Plan”). The Directors Restricted Stock Plan is administered by the Company’s Board of Directors.  As of March 31, 2013, the maximum number of restricted shares available for grants under the Directors Restricted Stock Plan was 107,955.  Restricted shares granted under the Directors Restricted Stock Plan generally vest on the first anniversary of the grant date.  Grants under the Directors Restricted Stock Plan entitle the holder to receive shares of the Company’s common stock without payment.

The grant-date fair value of each option grant under the 2000 Option Plan, the 2009 Option Plan and the Directors Option Plan is estimated using the Black-Scholes option pricing model. The grant-date fair value of each restricted share grant is determined based on the closing share price of the Company’s stock on the date of the grant. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model for option grants requires management to make certain assumptions with respect to selected model inputs. Expected share price volatility is calculated based on the historical volatility of the stock of the Company and implied volatility derived from related exchange traded options. The average expected life was based on the contractual term of the option and expected exercise and historical post-vesting termination experience. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The expected annual dividend per share is based on the Company’s dividend rate.

Stock-based compensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates.  Changes in estimated forfeitures are recognized in the period of change and impact the amount of expense to be recognized in future periods.  For the three months ended March 31, 2013, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $8,283 and $6,031, respectively.  For the three months ended March 31, 2012, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $7,491 and $5,353, respectively. The expense incurred for stock-based compensation is included in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Income.

Stock Options

Stock option activity for the three months ended March 31, 2013 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2013	13,446,719		$	43.39	7.08	$	268,596
Options exercised	(1,043,444	)	31.30
Options forfeited	(58,500	)	50.58
Options outstanding at March 31, 2013	12,344,775		44.37		7.06	373,596
Vested and non-vested options expected to vest atMarch 31, 2013	11,297,092		$	44.09	6.98	$	345,248
Exercisable options at March 31, 2013	4,460,718		$	38.38	5.59	$	161,774

A summary of the status of the Company’s non-vested options as of March 31, 2013 and changes during the three months then ended is as follows:

	Options		Weighted Average Fair Value at Grant Date
Non-vested options at January 1, 2013	7,951,177		$	13.36
Options vested	(8,620	)	15.62
Options forfeited	(58,500	)	13.50
Non-vested options at March 31, 2013	7,884,057		13.35

During the three months ended March 31, 2013 and 2012, the following activity occurred under the Company’s option plans:

	Three months ended March 31,
	2013		2012
Total intrinsic value of stock options exercised	$	40,542	$	24,819
Total fair value of stock options vested	135		119

As of March 31, 2013, the total compensation cost related to non-vested options not yet recognized is approximately $68,292 with a weighted average expected amortization period of 3.08 years.

Restricted Shares

As of March 31, 2013, the Company has issued 17,045 restricted shares with a weighted-average fair value at grant date of $53.78 per share.  As of March 31, 2013, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $148 with a weighted average expected amortization period of 0.15 years.