Old COPPER Company, Inc. - 10-Q filing on 2014-12-09

Stock-Based Compensation

9 Months Ended

Nov. 01, 2014

We grant stock-based compensation awards to employees and non-employee directors under our equity compensation plan. On May 16, 2014, our stockholders approved the J. C. Penney Company, Inc. 2014 Long-Term Incentive Plan (2014 Plan), which has a fungible share design in which each stock option will count as one share issued and each stock award will count as two shares issued. The 2014 Plan reserved 16 million shares or 32 million options for future grants and will terminate on May 31, 2019. In addition, shares underlying any outstanding stock award or stock option grant canceled prior to vesting or exercise become available for use under the 2014 Plan. On May 21, 2014, the Company also approved an equity inducement award plan (2014 Equity Inducement Plan) which reserved 750,000 restricted stock units to grant to an incoming executive officer of the Company. Our prior 2012 Long-Term Incentive Plan (2012 Plan) terminated on May 16, 2014, except for outstanding awards, and all subsequent awards have been granted under the 2014 Plan or the 2014 Equity Inducement Plan. Under the terms of the 2014 Plan, all grants made after January 31, 2014 reduce the shares available for grant under the 2014 Plan. As of November 1, 2014, a maximum of 24.0 million shares of stock were available for future grant under the 2014 Plan.

Stock-based compensation expense for the three months ended November 1, 2014 and November 2, 2013 was $10 million and $7 million, respectively. Stock-based compensation expense for the nine months ended November 1, 2014 and November 2, 2013 was $31 million and $39 million, respectively. Through the first nine months of 2014, the Company granted the following stock-based compensation awards:



	Restricted Stock Units (RSU)		Stock Options			Weighted Average Grant Date Fair Value
Grant Date	Time-based	Performance-based	Performance-based	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
March 3, 2014	25,000	—	—	$	—	$	7.96
March 20, 2014	2,328,000	329,000	2,322,000	8.36		6.09
March 27, 2014	84,000	—	185,000	8.97		5.59
May 20, 2014⁽¹⁾	306,000	—	—	—		8.93
August 19, 2014	883,000	—	—	—		10.25
Total	3,626,000	329,000	2,507,000	8.41		6.78


(1)	Includes approximately 224,000 RSUs that were granted under the 2014 Equity Inducement Plan.

Performance-based stock options and awards that ultimately vest are dependent on market performance targets measured by either the performance of the Company’s common stock (market condition) or on the achievement of a 2014 internal profitability target (performance condition).

In addition to the grants above, on March 20, 2014, we granted approximately 2.3 million phantom units as part of our management incentive compensation plan, which are similar to RSUs in that the number of units granted was based on the price of our stock, but the units will be settled in cash based on the value of our stock on the vesting date, limited to $16.72 per phantom unit. The fair value of the awards is remeasured at each reporting period and was $7.61 per share as of November 1, 2014. Compensation expense, which is variable, is recognized over the vesting period with a corresponding liability, which is recorded in Other liabilities in our unaudited Interim Consolidated Balance Sheets. On May 21, 2014, we also granted approximately 157,000 RSUs to directors with a fair value of $8.60 per RSU award. Additionally, on October 9, 2014, we granted approximately 13,000 RSUs to a new director with a fair value of $7.64 per RSU award.