Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

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

Stock-Based Compensation

Stock-Based Compensation

Under the Company's 2004 Stock Incentive Plan ("2004 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 vested over periods up to three years and have a term of 10 years from date of grant. 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 50% 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. Under the 2004 Plan, 25.0 million shares are authorized for grant, of which approximately 2.6 million shares are available for future issuance as of March 31, 2014. In February 2014, the Company's Board of Directors replaced the expired 2004 Plan by adopting the BorgWarner Inc. 2014 Stock Incentive Plan ("the 2014 Plan"). On April 30, 2014, the Company's stockholders voted and approved the 2014 Plan.

Stock options A summary of the Company’s stock option activity for the three months ended March 31, 2014 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, 2013	1,997		$	15.82	2.6	$	80.0
Exercised	(54	)	$	14.41
Outstanding and exercisable at March 31, 2014	1,943		$	15.86	2.4	$	88.6

Restricted stock The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2014, restricted stock in the amount of 419,926 shares was granted to employees 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 restriction periods.

The Company recorded restricted stock compensation expense of $4.5 million and $11.1 million for the three months ended March 31, 2014 and 2013, respectively.

During the fourth quarter of 2012, the Company waived the forfeiture provision associated with future restricted stock grants made to certain retiring Named Executive Officers. The expense of $11.1 million for the three months ended March 31, 2013 includes $5.5 million of expense related to the grant of restricted stock awards to these Named Executive Officers.

A summary of the Company’s nonvested restricted stock for the three months ended March 31, 2014 is as follows:

	Shares subject to restriction (thousands)		Weighted average price
Nonvested at December 31, 2013	1,411		$	37.86
Granted	420		$	53.90
Vested	(498	)	$	37.38
Forfeited	(16	)	$	39.54
Nonvested at March 31, 2014	1,317		$	43.08