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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/22/2016
Entire Document
 
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

The following tables are a summary of stock option activity during 2015.
 
 
Options
 
Weighted-
Average
Exercise Price
(per option)
 
Weighted-
Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic
Value
Stock options outstanding as of January 1, 2015
 
7.4

 
$
9.70

 
 
 
 
Exercised
 
(1.4
)
 
9.99

 
 
 
 
Stock options outstanding as of December 31, 2015
 
6.0

 
$
9.63

 
3.5
 
$
82.4

Stock options vested and expected to vest as of December 31, 2015
 
6.0

 
$
9.63

 
3.5
 
$
82.4

Stock options exercisable as of December 31, 2015
 
5.8

 
$
9.51

 
3.4
 
$
80.1

 
 
 
 
 
 
 
 
 
 
 
Options
 
Weighted-
Average Grant
Date Fair Value
(per option)
 
Weighted-
Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic
Value
Non-vested as of January 1, 2015
 
0.6

 
$
4.16

 
 
 
 
Vested
 
(0.4
)
 
4.18

 
 
 
 
Non-vested as of December 31, 2015
 
0.2

 
$
4.14

 
7.2
 
$
2.4

There were 1.4, 1.7 and 5.2 stock options exercised in 2015, 2014 and 2013, respectively. The total intrinsic value of stock options exercised during 2015, 2014 and 2013 was $16.1, $10.7 and $26.2, respectively. The cash received from the stock options exercised in 2015, 2014 and 2013 was $20.4, $25.2 and $59.5, respectively.
We use the Black-Scholes option-pricing model to estimate the fair value of options granted, which requires the input of subjective assumptions including the option’s expected term and the price volatility of the underlying stock. Changes in the assumptions can materially affect the estimate of fair value, and our results of operations could be materially impacted. There were no stock options granted during the years ended December 31, 2015 and 2014. The weighted-average grant-date fair value per option during the year ended December 31, 2013 was $4.14.
The fair value of each option grant has been estimated with the following weighted-average assumptions.
 
 
Year ended December 31, 2013
Expected volatility 1
 
40.2
%
Expected term (years) 2
 
6.9

Risk-free interest rate 3
 
1.3
%
Expected dividend yield 4
 
2.4
%
 
1
The expected volatility used to estimate the fair value of stock options awarded is based on a blend of: (i) historical volatility of our common stock for periods equal to the expected term of our stock options and (ii) implied volatility of tradable forward put and call options to purchase and sell shares of our common stock.
2
The estimate of our expected term is based on the average of: (i) an assumption that all outstanding options are exercised upon achieving their full vesting date and (ii) an assumption that all outstanding options will be exercised at the midpoint between the current date (i.e., the date awards have ratably vested through) and their full contractual term. In determining the estimate, we considered several factors, including the historical option exercise behavior of our employees and the terms and vesting periods of the options.
3
The risk-free interest rate is determined using the implied yield currently available for zero-coupon U.S. government issuers with a remaining term equal to the expected term of the options.
4
The expected dividend yield was calculated based on an annualized dividend of $0.30 per share in 2013.

Stock-Based Compensation
We grant other stock-based compensation awards such as stock-settled awards, cash-settled awards and performance-based awards (settled in cash or shares) to certain key employees. The number of shares or units received by an employee for performance-based awards depends on Company performance against specific performance targets and could range from 0% to 300% of the target amount of shares originally granted. Incentive awards are subject to certain restrictions and vesting requirements as determined by the Compensation Committee. The fair value of the shares on the grant date is amortized over the vesting period, which is generally three years. Upon completion of the vesting period for cash-settled awards, the grantee is entitled to receive a payment in cash based on the fair market value of the corresponding number of shares of common stock. No monetary consideration is paid by a recipient for any incentive award. The fair value of cash-settled awards is adjusted each quarter based on our share

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