LabCorp 2013 Annual Report Download - page 46

42
Cash received by the Company from option exercises, the actual tax benefit realized for the tax deductions and the aggregate intrinsic
value of options exercised from option exercises under all share-based payment arrangements during the years ended December 31, 2013,
2012, and 2011 were as follows:
2013 2012 2011
Cash received by the Company $ 158.0 $ 69.4 $ 106.1
Tax benefits realized $ 21.3 $ 9.7 $ 17.7
Aggregate intrinsic value $ 55.4 $ 25.3 $ 45.5
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
The following table summarizes information concerning currently outstanding and exercisable options.
Options Outstanding Options Exercisable
Weighted-Average Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
$ 6.80 – 59.37 0.1 1.6 $53.25 0.1 $53.25
$ 59.38 – 67.60 0.4 5.1 $60.32 0.4 $60.32
$ 67.61 – 75.63 1.1 5.3 $72.82 1.1 $72.82
$ 75.64 – 80.37 0.4 3.4 $80.07 0.4 $80.07
$ 80.38 – 98.49 2.6 7.8 $87.39 1.1 $88.57
4.6 6.4 $80.18 3.1 $77.06
The following table shows the weighted average grant-date fair
values of options issued during the respective year and the weighted
average assumptions that the Company used to develop the fair
value estimates:
2013 2012 2011
Fair value per option N/A $ 13.43 $ 17.06
Valuation assumptions
Weighted average expected life (in years) N/A 3.4 3.4
Risk-free interest rate N/A 0.4% 1.0%
Expected volatility N/A 0.2 0.2
Expected dividend yield N/A – –
The Black Scholes model incorporates assumptions to value
stock-based awards. The risk-free interest rate for periods within
the contractual life of the option is based on a zero-coupon U.S.
government instrument over the contractual term of the equity
instrument. Expected volatility of the Company’s stock is based
on historical volatility of the Company’s stock. The Company uses
historical data to calculate the expected life of the option. Groups
of employees and non-employee directors that have similar exer-
cise behavior with regard to option exercise timing and forfeiture
rates are considered separately for valuation purposes. For 2013,
2012 and 2011, expense related to the Company’s stock option
plan totaled $14.5, $21.5 and $24.9, respectively. The Company did
not grant any options to employees during 2013.
Restricted Stock, Restricted Stock Units
and Performance Shares
The Company grants restricted stock, restricted stock units and
performance shares (“non-vested shares”) to officers, key employees,
and non-employee directors under all plans. Restricted stock and
restricted stock units become vested annually in equal one-third
increments beginning on the first anniversary of the grant. A perfor-
mance share grant in 2011 represents a three-year award opportunity
for the period 2011-2013 and becomes vested in the first quarter of
2014. A performance share grant in 2012 represents a three year
award opportunity for the period of 2012-2014 and becomes
vested in the first quarter of 2015. A performance share grant in
2013 represents a three-year award opportunity for the period of
2013-2015 and becomes vested in the first quarter of 2016.
Performance share awards are subject to certain earnings per share,
revenue, operating income, earnings before income taxes and total
shareholder return targets, the achievement of which may increase
or decrease the number of shares which the grantee receives upon
vesting. The unearned restricted stock and performance share
compensation is being amortized to expense over the applicable
vesting periods. For 2013, 2012 and 2011, total restricted stock,
restricted stock units and performance share compensation
expense was $19.3, $14.3 and $21.3, respectively.