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Stock-Based Compensation
9 Months Ended
Sep. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] 
Stock-Based Compensation
Stock-Based Compensation

Under the Company’s 1993 Stock Incentive Plan (“1993 Plan”), the Company granted options to purchase shares of the Company’s common stock at the fair market value on the date of grant. The options vest over periods up to three years and have a term of ten years from date of grant. As of December 31, 2003, there were no options available for future grants under the 1993 Plan. The 1993 Plan expired at the end of 2003 and was replaced by the Company’s 2004 Stock Incentive Plan, which was amended at the Company’s 2009 Annual Stockholders Meeting, among other things, to increase the number of stock options or restricted shares available for issuance under the Plan. Under the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (“2004 Stock Incentive Plan”), 12.5 million shares were authorized for grant, of which 2,228,183 shares are available for future award.

A summary of the Plans’ shares under option for the nine months ended September 30, 2011 is as follows:
 
Shares
Under
Option
(thousands)
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life (in years)
 
Aggregate
Intrinsic
Value
(in millions)
Outstanding and exercisable at December 31, 2010
3,253

 
$
28.64

 
4.9

 
$
142.2

Exercised
(476
)
 
$
28.40

 
 
 

Outstanding and exercisable at March 31, 2011
2,777

 
$
28.69

 
4.7

 
$
141.6

Exercised
(208
)
 
$
25.83

 
 
 
 
Outstanding and exercisable at June 30, 2011
2,569

 
$
28.91

 
4.5

 
$
133.3

Exercised
(147
)
 
$
26.34

 
 
 
 
Outstanding and exercisable at September 30, 2011
2,422

 
$
29.09

 
4.3

 
$
76.2



At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees vests fifty percent after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the anniversary date of the grant.

The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In February 2011, restricted stock in the amount of 270,144 was granted to employees under the 2004 Stock Incentive Plan. In April 2011, restricted stock in the amount of 3,288 was granted to non-employee directors under the 2004 Stock Incentive Plan. The value of the awards is recorded as unearned compensation within capital in excess of par value in equity and is amortized as compensation expense over the restricted periods.

Restricted stock compensation expense reduced earnings before income taxes and noncontrolling interest, net earnings and earnings per share for the three and nine months ended September 30, 2011 and 2010 by:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(millions of dollars, except per share data)
2011
 
2010
 
2011
 
2010
Earnings before income taxes and noncontrolling interest
$
3.4

 
$
5.0

 
$
11.0

 
$
15.4

Net earnings
$
2.6

 
$
3.7

 
$
8.4

 
$
12.0

Earnings per share — basic
$
0.02

 
$
0.03

 
$
0.08

 
$
0.10

Earnings per share — diluted
$
0.02

 
$
0.03

 
$
0.07

 
$
0.09



A summary of the Company’s nonvested restricted stock for the nine months ended September 30, 2011 is as follows:
 
Shares
Subject to
Restriction
(thousands)
 
Weighted
Average
Price
Nonvested at December 31, 2010
1,870.6

 
$
30.55

Granted
270.1

 
$
70.47

Vested
(572.0
)
 
$
27.00

Forfeited
(12.4
)
 
$
30.14

Nonvested at March 31, 2011
1,556.3

 
$
38.79

Granted
3.3

 
$
78.47

Vested
(25.2
)
 
$
33.69

Forfeited
(27.3
)
 
$
38.03

Nonvested at June 30, 2011
1,507.1

 
$
38.98

Granted
1.0

 
$
71.66

Vested
(3.4
)
 
$
44.38

Forfeited
(58.4
)
 
$
37.75

Nonvested at September 30, 2011
1,446.3

 
$
39.04