Annual report pursuant to Section 13 and 15(d)

Stock Plans

v2.4.0.8
Stock Plans
 12 Months Ended
Aug. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Plans
Stock Plans
Stock options may be granted to key employees and directors under the Actuant Corporation 2009 Omnibus Incentive Plan (the “Plan”). At August 31, 2014, 9,400,000 shares of Class A common stock were authorized for issuance under the Plan, of which 3,915,647 shares were available for future award grants. The Plan permits the Company to grant share-based awards, including stock options, restricted stock and Performance Shares to employees and directors. Options generally have a maximum term of ten years, an exercise price equal to 100% of the fair market value of the Company’s common stock at the date of grant and generally vest 50% after three years and 100% after five years. The Company’s restricted stock grants generally have similar vesting provisions. The Performance Shares include a three-year performance period, with vesting based 50% on achievement of an absolute Free Cash Flow Conversion target and 50% on the Company’s Total Shareholder Return (TSR) relative to the S&P 600 SmallCap Industrial index. The provisions of share-based awards may vary by individual grant with respect to vesting period, dividend and voting rights, performance conditions and forfeitures.

A summary of stock option activity during fiscal 2014 is as follows:
 
 
Shares
 
Weighted-Average
Exercise Price (Per Share)
 
Weighted-Average
Remaining Contractual
Term
 
Aggregate
Intrinsic Value
Outstanding on September 1, 2013
 
4,179,551

 
$
23.66

 
 
 
 
Granted
 
211,276

 
35.98

 
 
 
 
Exercised
 
(1,076,370
)
 
21.16

 
 
 
 
Forfeited
 
(64,056
)
 
26.44

 
 
 
 
Outstanding on August 31, 2014
 
3,250,401

 
$
25.24

 
4.6
 
$
27.6
 million
Exercisable on August 31, 2014
 
2,255,920

 
$
24.48

 
3.4
 
$
20.9
 million

Intrinsic value is the difference between the market value of the stock at August 31, 2014 and the exercise price which is aggregated for all options outstanding and exercisable. A summary of the weighted-average grant-date fair value of options, total intrinsic value of options exercised, and cash receipts from options exercised is shown below (in thousands, except per share amounts):
 
Year Ended August 31,
 
2014
 
2013
 
2012
Weighted-average fair value of options granted (per share)
$
14.46

 
$
10.49

 
$
8.73

Intrinsic value of options exercised
16,380

 
15,803

 
7,946

Cash receipts from exercise of options
21,995

 
24,840

 
6,550


A summary of restricted stock activity (including Performance Shares) during fiscal 2014 is as follows:
 
 
Number of
Shares
 
Weighted-Average Fair  Value at Grant Date (Per Share)
Outstanding August 31, 2013
 
1,594,189

 
$25.83
Granted
 
311,425

 
36.05
Forfeited
 
(98,582
)
 
27.36
Vested
 
(480,572
)
 
25.42
Outstanding August 31, 2014
 
1,326,460

 
28.27

As of August 31, 2014, there was $23.5 million of total unrecognized compensation cost related to share-based awards, including stock options and restricted stock awards/units. That cost is expected to be recognized over a weighted average period of 2.9 years. The total fair value of shares vested during the fiscal years ended August 31, 2014 and 2013 was $17.9 million and $6.2 million, respectively.
 
The Company generally records compensation expense (over the vesting period) for restricted stock awards based on the market value of Actuant common stock on the grant date. Stock based compensation expense is determined using a binomial pricing model for options. The fair value of Performance Shares with market vesting conditions is determined utilizing a Monte Carlo simulation model. Assumptions used to determine the fair value of each option were based upon historical data and standard industry valuation practices and methodology. The following weighted-average assumptions were used in each fiscal year:
 
Fiscal Year Ended August 31,
 
2014
 
2013
 
2012
Dividend yield
0.11
%
 
0.14
%
 
0.18
%
Expected volatility
38.30
%
 
38.36
%
 
39.97
%
Risk-free rate of return
0.70
%
 
0.84
%
 
1.19
%
Expected forfeiture rate
14
%
 
15
%
 
15
%
Expected life
6.1 years

 
6.1 years

 
6.1 years