Annual report pursuant to Section 13 and 15(d)

Stock-Based Employee Compensation

v2.4.0.8
Stock-Based Employee Compensation
 12 Months Ended
Feb. 28, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED EMPLOYEE COMPENSATION
STOCK-BASED EMPLOYEE COMPENSATION:

The Company has two material stock-based employee compensation plans (as further discussed below). Total compensation cost and income tax benefits recognized for the Company’s stock-based awards are as follows:
 
For the Years Ended
 
February 28, 2014
 
February 28, 2013
 
February 29, 2012
(in millions)
 
 
 
 
 
Total compensation cost for stock-based awards recognized in the Consolidated Statements of Comprehensive Income
$
49.9

 
$
40.8

 
$
47.6

Total income tax benefit recognized in the Consolidated Statements of Comprehensive Income for stock-based compensation
$
17.1

 
$
13.8

 
$
16.3

Total compensation cost for stock-based awards capitalized in inventory in the Consolidated Balance Sheets
$
4.2

 
$
4.1

 
$
3.7



Long-term stock incentive plan –
Under the Company’s Long-Term Stock Incentive Plan, nonqualified stock options, restricted stock, restricted stock units, performance share units, and other stock-based awards may be granted to employees, officers and directors of the Company. The aggregate number of shares of the Company’s Class A Common Stock and Class 1 Common Stock available for awards under the Company’s Long-Term Stock Incentive Plan is 108,000,000 shares. The exercise price, vesting period and term of nonqualified stock options granted are established by the committee administering the plan (the “Committee”). The exercise price of any nonqualified stock option may not be less than the fair market value of the Company’s Class A Common Stock on the date of grant. Nonqualified stock options generally vest and become exercisable over a four-year period from the date of grant. Nonqualified stock options expire at the times established by the Committee, but not later than ten years after the grant date.

Grants of restricted stock, restricted stock units, performance share units, and other stock-based awards may contain such vesting, terms, conditions and other requirements as the Committee may establish. Restricted stock and restricted stock unit awards are based on service and generally vest over one to four years from the date of grant. Performance share unit awards are based on service and the satisfaction of certain performance conditions, and vest over a required employee service period, generally from one to three years from the date of grant, which closely matches the performance period. The performance conditions include the achievement of specified financial or operational performance metrics, or market conditions which require the achievement of specified levels of shareholder return relative to other companies as defined in the applicable performance share unit agreement. The actual number of shares to be awarded upon vesting of a performance share unit award will range between 0% and 200% of the target award, based upon the measure of performance as determined by the Committee. Performance share unit awards presented in the table below for the years ended February 28, 2014, February 28, 2013, and February 29, 2012, reflect the awards at target. For the year ended February 28, 2014, 309,653 shares of the Company’s Class A Common Stock (net of 267,577 shares withheld to satisfy tax withholding requirements) were issued from treasury shares for the vesting of performance share units at 200% of the target award.

A summary of stock option activity primarily under the Company’s Long-Term Stock Incentive Plan is as follows:
 
Number
of
Options
Outstanding
 
Weighted
Average
Exercise
Price
 
Number
of
Options
Exercisable
 
Weighted
Average
Exercise
Price
Balance, February 28, 2011
29,843,605

 
$
18.63

 
18,148,632

 
$
20.31

Granted
2,745,309

 
$
20.62

 
 
 
 
Exercised
(3,438,706
)
 
$
14.75

 
 
 
 
Forfeited
(550,203
)
 
$
16.91

 
 
 
 
Expired
(1,668,708
)
 
$
24.03

 
 
 
 
Balance, February 29, 2012
26,931,297

 
$
19.03

 
18,198,577

 
$
20.18

Granted
1,980,260

 
$
24.65

 
 
 
 
Exercised
(8,234,324
)
 
$
19.18

 
 
 
 
Forfeited
(207,945
)
 
$
17.81

 
 
 
 
Expired
(205,210
)
 
$
24.11

 
 
 
 
Balance, February 28, 2013
20,264,078

 
$
19.48

 
13,697,345

 
$
19.66

Granted
1,284,500

 
$
48.79

 
 
 
 
Exercised
(6,119,923
)
 
$
19.63

 
 
 
 
Forfeited
(103,497
)
 
$
28.86

 
 
 
 
Expired
(11,084
)
 
$
18.79

 
 
 
 
Balance, February 28, 2014
15,314,074

 
$
21.82

 
10,913,019

 
$
18.91



A summary of restricted Class A Common Stock activity under the Company’s Long-Term Stock Incentive Plan is as follows:
 
Restricted Stock Awards
 
Number of
Restricted
Stock Awards
Outstanding
 
Weighted
Average
Grant-Date
Fair Value
 
Fair
Value of
Shares
Vested
Nonvested balance, February 28, 2011
1,810,316

 
$
14.83

 
 
Granted
622,092

 
$
20.63

 
 
Vested
(529,118
)
 
$
14.87

 
$
11,826,372

Forfeited
(105,402
)
 
$
16.56

 
 
Nonvested balance, February 29, 2012
1,797,888

 
$
16.72

 
 
Granted
18,190

 
$
30.14

 
 
Vested
(626,914
)
 
$
16.26

 
$
13,741,842

Forfeited
(61,140
)
 
$
17.44

 
 
Nonvested balance, February 28, 2013
1,128,024

 
$
17.16

 
 
Granted
12,375

 
$
50.90

 
 
Vested
(697,994
)
 
$
15.90

 
$
34,427,377

Forfeited
(33,661
)
 
$
19.00

 
 
Nonvested balance, February 28, 2014
408,744

 
$
20.18

 
 
 
Restricted Stock Units
 
Number of
Restricted
Stock Units
Outstanding
 
Weighted
Average
Grant-Date
Fair Value
 
Fair
Value of
Shares
Vested
Nonvested balance, February 28, 2011
219,498

 
$
15.23

 
 
Granted
80,970

 
$
20.60

 
 
Vested
(60,928
)
 
$
15.43

 
$
1,364,178

Forfeited
(36,458
)
 
$
16.93

 
 
Nonvested balance, February 29, 2012
203,082

 
$
17.01

 
 
Granted
609,080

 
$
25.08

 
 
Vested
(66,500
)
 
$
16.69

 
$
1,443,700

Forfeited
(24,159
)
 
$
23.31

 
 
Nonvested balance, February 28, 2013
721,503

 
$
23.65

 
 
Granted
656,710

 
$
50.74

 
 
Vested
(218,306
)
 
$
21.30

 
$
10,747,204

Forfeited
(55,327
)
 
$
30.58

 
 
Nonvested balance, February 28, 2014
1,104,580

 
$
39.87

 
 

 
Performance Share Units
 
Number of
Performance
Share Units
Outstanding
 
Weighted
Average
Grant-Date
Fair Value
 
Fair
Value of
Shares
Vested
Nonvested balance, February 28, 2011
404,410

 
$
16.67

 
 
Granted
319,880

 
$
20.60

 
 
Vested
(202,205
)
 
$
16.67

 
$
4,527,370

Forfeited
(33,875
)
 
$
18.93

 
 
Nonvested balance, February 29, 2012
488,210

 
$
19.09

 
 
Granted
256,420

 
$
38.47

 
 
Vested
—

 
$
—

 
$
—

Forfeited
(15,620
)
 
$
21.15

 
 
Nonvested balance, February 28, 2013
729,010

 
$
25.86

 
 
Granted
298,710

 
$
57.88

 
 
Vested
(197,450
)
 
$
16.97

 
$
9,762,648

Forfeited
(31,670
)
 
$
34.98

 
 
Nonvested balance, February 28, 2014
798,600

 
$
39.67

 
 


The following table summarizes information about stock options outstanding at February 28, 2014:
Range of Exercise Prices
 
Number
of
Options
 
Weighted
Average
Remaining
Contractual
Life
 
Weighted
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
$11.85 – $16.63
 
2,682,830

 
5.0 years
 
$
11.96

 
 
$16.67 – $20.05
 
4,083,010

 
5.1 years
 
$
17.90

 
 
$20.60 – $23.02
 
3,782,757

 
5.2 years
 
$
20.86

 
 
$23.48 – $26.24
 
2,936,763

 
5.7 years
 
$
24.86

 
 
$27.24 – $53.41
 
1,828,714

 
6.8 years
 
$
42.13

 
 
Options outstanding
 
15,314,074

 
5.4 years
 
$
21.82

 
$
906,746,691

Options exercisable
 
10,913,019

 
4.5 years
 
$
18.91

 
$
677,967,080



Other information pertaining to stock options is as follows:
 
For the Years Ended
 
February 28, 2014
 
February 28, 2013
 
February 29, 2012
Weighted average grant-date fair value of stock options granted
$
16.88

 
$
8.39

 
$
7.41

Total fair value of stock options vested
$
20,457,096

 
$
22,421,290

 
$
31,140,184

Total intrinsic value of stock options exercised
$
235,540,914

 
$
95,033,640

 
$
23,139,194

Tax benefit realized from stock options exercised
$
61,354,379

 
$
25,274,158

 
$
10,835,473



The fair value of stock options is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
 
For the Years Ended
 
February 28, 2014
 
February 28, 2013
 
February 29, 2012
Expected life
5.9 years

 
6.0 years

 
5.9 years

Expected volatility
34.8
%
 
32.7
%
 
32.0
%
Risk-free interest rate
0.9
%
 
1.4
%
 
2.7
%
Expected dividend yield
0.0
%
 
0.0
%
 
0.0
%


For the years ended February 28, 2014, February 28, 2013, and February 29, 2012, the Company used a projected expected life for each stock option award granted based on historical experience of employees’ exercise behavior for similar type awards. Expected volatility for the years ended February 28, 2014, February 28, 2013, and February 29, 2012, is based primarily on historical volatility levels of the Company’s Class A Common Stock. The risk-free interest rate for the years ended February 28, 2014, February 28, 2013, and February 29, 2012, is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life.

The weighted average grant-date fair value of performance share units granted with a market condition for the years ended February 28, 2014, and February 28, 2013, was $66.33 and $38.47, respectively. There were no performance share units granted with a market condition for the year ended February 29, 2012. The fair value of performance share units granted with a market condition is estimated on the date of grant using the Monte Carlo Simulation model with the following weighted average assumptions:
 
For the Years Ended
 
February 28, 2014
 
February 28, 2013
Grant-date price
$
48.89

 
$
24.50

Performance period
3.0 years

 
2.9 years

Expected volatility
38.7
%
 
28.6
%
Risk-free interest rate
0.4
%
 
0.5
%
Expected dividend yield
0.0
%
 
0.0
%


For the years ended February 28, 2014, and February 28, 2013, the Company based expected volatility primarily on historical volatility levels of the Company’s Class A Common Stock. The risk-free interest rate for the years ended February 28, 2014, and February 28, 2013, is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the performance period.

Employee stock purchase plan –
The Company has a stock purchase plan (the “Employee Stock Purchase Plan”) under which 9,000,000 shares of Class A Common Stock may be issued. Under the terms of the plan, eligible employees may purchase shares of the Company’s Class A Common Stock through payroll deductions. The purchase price is the lower of 85% of the fair market value of the stock on the first or last day of the purchase period. For the years ended February 28, 2014, February 28, 2013, and February 29, 2012, employees purchased 163,817 shares, 210,895 shares and 272,560 shares, respectively, under this plan. In addition, for the year ended February 29, 2012, there were 6,801 shares purchased under an immaterial stock purchase plan for eligible employees and directors of the Company’s U.K. subsidiaries.

The weighted average fair value of purchase rights granted under the Employee Stock Purchase Plan for the years ended February 28, 2014, February 28, 2013, and February 29, 2012, was $13.90, $8.23 and $4.90, respectively. The fair value of purchase rights granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
 
For the Years Ended
 
February 28, 2014
 
February 28, 2013
 
February 29, 2012
Expected life
0.5 years

 
0.5 years

 
0.5 years

Expected volatility
24.3
%
 
41.8
%
 
30.4
%
Risk-free interest rate
0.1
%
 
0.1
%
 
0.2
%
Expected dividend yield
0.0
%
 
0.0
%
 
0.0
%


As of February 28, 2014, there was $75.4 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Company’s stock-based employee compensation plans. This cost is expected to be recognized in the Company’s Consolidated Statements of Comprehensive Income over a weighted-average period of 2.2 years. With respect to the issuance of shares under any of the Company’s stock-based compensation plans, the Company has the option to issue authorized but unissued shares or treasury shares.