Note 5—Equity

Stock-Based Compensation:

The Company’s income before income taxes (and net income) were reduced by $47.6 ($36.2 after-tax), $44.2 ($32.9 after-tax) and $41.4 ($30.3 after-tax) for the years ended December 31, 2016, 2015 and 2014, respectively, related to the expense incurred for stock-based compensation plans, which is included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Income.

Stock Options

In 2009, the Company adopted the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and its Subsidiaries (the “2009 Employee Option Plan”). The Company also continues to maintain the 2000 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2000 Employee Option Plan”). No additional stock options can be granted under the 2000 Employee Option Plan. The 2009 Employee Option Plan authorizes the granting of additional stock options by a committee of the Company’s Board of Directors. The number of shares of the Company’s Class A Common Stock (“Common Stock”) reserved for issuance under the 2009 Employee Option Plan, as amended, is 58,000,000 shares. As of December 31, 2016, there were 12,078,110 shares of Common Stock available for the granting of additional stock options under the 2009 Employee Option Plan. Options granted under the 2000 Employee Option Plan are fully vested and are generally exercisable over a period of ten years from the date of grant. Options granted under the 2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant 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 “2004 Directors Option Plan”). The 2004 Directors Option Plan is administered by the Company’s Board of Directors. As of December 31, 2016, there were 140,000 shares of Common Stock available for the granting of additional stock options under the 2004 Directors Option Plan, although no additional stock options are expected to be granted under this plan. Options were last granted under the 2004 Directors Option Plan in May 2011. Options granted under the 2004 Directors Option Plan are fully vested and are generally exercisable over a period of ten years from the date of grant.

Stock option activity for 2014, 2015 and 2016 was as follows:


				Weighted
				Average	Aggregate
		Weighted		Remaining	Intrinsic
		Average		Contractual	Value
	Options	Exercise Price		Term (in years)	(in millions)
Options outstanding at January 1, 2014	26,844,452	$	25.90	7.08
Options granted	6,220,000		47.70
Options exercised	(4,790,252)		20.27
Options forfeited	(486,280)		34.55
Options outstanding at December 31, 2014	27,787,920		31.60	7.09
Options granted	6,490,200		57.85
Options exercised	(2,718,745)		23.71
Options forfeited	(422,900)		41.73
Options outstanding at December 31, 2015	31,136,475		37.62	6.92
Options granted	7,560,450		57.72
Options exercised	(5,703,254)		25.80
Options forfeited	(727,280)		50.17
Options outstanding at December 31, 2016	32,266,391	$	44.14	7.03	$	744.1
Vested and non-vested options expected to vest at December 31, 2016	30,542,834	$	43.66	6.96	$	718.9
Exercisable options at December 31, 2016	13,540,821	$	32.91	5.37	$	464.4

A summary of the status of the Company’s non-vested options as of December 31, 2016 and changes during the year then ended is as follows:


		Weighted Average
		Fair Value
	Options	at Grant Date
Non-vested options at January 1, 2016	17,323,040	$	8.24
Options granted	7,560,450		7.39
Options vested	(5,430,640)		7.93
Options forfeited	(727,280)		8.28
Non-vested options at December 31, 2016	18,725,570	$	7.99

The weighted average fair value at the grant date of options granted during 2015 and 2014 was $8.47 and $8.64, respectively.

During the years ended December 31, 2016, 2015 and 2014, the following activity occurred under the Company’s option plans:


	2016		2015		2014
Total intrinsic value of stock options exercised	$	197.2	$	88.1	$	136.8
Total fair value of stock options vested		43.1		39.9		37.2

As of December 31, 2016, the total compensation cost related to non-vested options not yet recognized was approximately $112.8, with a weighted average expected amortization period of 3.30 years.

The grant date fair value of each option grant under the 2000 Employee Option Plan, the 2009 Employee Option Plan and the 2004 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 Common 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 Common Stock and implied volatility derived from related exchange traded options. The average expected life is 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 issuances 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.

Restricted Stock

In 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “2012 Directors Restricted Stock Plan”). The 2012 Directors Restricted Stock Plan is administered by the Company’s Board of Directors. As of December 31, 2016, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 137,069. Restricted shares granted under the 2012 Directors Restricted Stock Plan generally vest on the first anniversary of the grant date. Grants under the 2012 Directors Restricted Stock Plan entitle the holder to receive shares of the Company’s Common Stock without payment.

Restricted share activity for 2014, 2015 and 2016 was as follows:


				Weighted
				Average
		Fair Value		Remaining
	Restricted	at Grant		Amortization
	Shares	Date		Term (in years)
Restricted shares outstanding at January 1, 2014	26,880	$	38.76	0.39
Restricted shares granted	18,340		47.72
Shares vested and issued	(26,880)		38.76
Restricted shares outstanding at December 31, 2014	18,340		47.72	0.39
Restricted shares granted	17,948		57.85
Shares vested and issued	(19,032)		47.98
Restricted shares outstanding at December 31, 2015	17,256		57.97	0.39
Restricted shares granted	16,905		57.99
Shares vested and issued	(17,256)		57.97
Restricted shares outstanding at December 31, 2016	16,905		57.99	0.38

The total fair value of restricted share awards that vested during 2016, 2015, and 2014 was $1.0, $0.9, and $1.0, respectively. As of December 31, 2016, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $0.4 with a weighted average expected amortization period of 0.38 years.

Stock Repurchase Program:

In January 2013, the Board of Directors authorized a stock repurchase program under which the Company could repurchase up to 20 million shares of its Common Stock during the two-year period ending January 31, 2015 (the “2013 Stock Repurchase Program”). During the year ended December 31, 2014, the Company repurchased 11.4 million shares of its common stock for $539.4. These treasury shares have been retired by the Company and common stock and retained earnings were reduced accordingly. At December 31, 2014, the Company had repurchased all of the shares authorized under the 2013 Stock Repurchase Program.

In January 2015, the Board of Directors authorized a stock repurchase program under which the Company could repurchase up to 10 million shares of its Common Stock during the two-year period ended January 20, 2017 (the “2015 Stock Repurchase Program”). During the years ended December 31, 2016 and 2015, the Company repurchased 5.5 million and 4.5 million shares of its common stock for $325.8 and $248.9, respectively. These treasury shares have been retired by the Company and common stock and retained earnings were reduced accordingly. At December 31, 2016, the Company had repurchased all of the shares authorized under the 2015 Stock Repurchase Program.

On January 24, 2017, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may purchase up to $1,000.0 of the Company’s Common Stock during the two-year period ending January 24, 2019 in accordance with the requirements of Rule 10b-18 of the Exchange Act (the “2017 Stock Repurchase Program”). As of February 10, 2017, the Company repurchased approximately 3.2 million shares of its common stock for $213.9 under the 2017 Stock Repurchase Program. The price and timing of any future purchases under the 2017 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price.

Dividends:

Contingent upon declaration by the Board of Directors, the Company generally pays a quarterly dividend on shares of its Common Stock. In the third quarter of 2015, the Board of Directors approved an increase in the quarterly dividend rate from $0.125 to $0.14 per share effective with dividends declared in the third quarter of 2015, and in October 2016, approved a further increase in the quarterly dividend rate from $0.14 to $0.16 per share effective with dividends declared in the fourth quarter of 2016. Total dividends declared during 2016, 2015 and 2014 were $178.8, $163.7 and $140.6, respectively. Total dividends paid in 2016, 2015 and 2014 were $172.7, $159.3 and $101.9, respectively, including those declared in the prior year and paid in the current year.

Accumulated Other Comprehensive Income (Loss):

Balances of related after-tax components comprising Accumulated other comprehensive income (loss) included in equity at December 31, 2016, 2015 and 2014 are as follows:


	Foreign		Unrealized		Defined		Accumulated
	Currency		Gain (Loss)		Benefit		Other
	Translation		on Cash		Plan		Comprehensive
	Adjustments		Flow Hedges		Adjustment		Income (Loss)
Balance at January 1, 2014	$	67.0	$	(0.1)	$	(121.9)	$	(55.0)
Other comprehensive income (loss) before reclassifications, net of tax of nil, $0.2 and $39.9, respectively		(80.4)		(1.2)		(82.0)		(163.6)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($6.2)		—		—		12.8		12.8
Balance at December 31, 2014		(13.4)		(1.3)		(191.1)		(205.8)
Other comprehensive income (loss) before reclassifications, net of tax of nil, $0.1 and $5.5, respectively		(151.5)		(0.4)		(10.0)		(161.9)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($10.1)		—		—		18.2		18.2
Balance at December 31, 2015		(164.9)		(1.7)		(182.9)		(349.5)
Other comprehensive income (loss) before reclassifications, net of tax of nil, ($0.3) and $12.3, respectively		(108.6)		1.6		(28.8)		(135.8)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($8.9)		—		—		16.3		16.3
Balance at December 31, 2016	$	(273.5)	$	(0.1)	$	(195.4)	$	(469.0)

The amounts reclassified from Accumulated other comprehensive income (loss) for defined benefit plan liabilities, are included within Cost of sales and Selling, general and administrative expenses and for unrealized gain (loss) on cash flow hedges, are included in Cost of sales within the Company’s Consolidated Statements of Income.