LabCorp 2014 Annual Report Download - page 109

F-30
grant in 2012 represents a three-year award opportunity for the period 2012-2014, and if earned, vests fully (to the extent earned)
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, if earned, vests fully (to the extent earned) in the first quarter of 2016. A performance share grant in 2014 represents a three-
year award opportunity for the period of 2014-2016 and, if earned, vests fully (to the extent earned) in the first quarter of 2017.
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 earns
and therefore receives upon vesting. Unearned restricted stock and performance share compensation is amortized to expense over
the applicable vesting periods. For 2014, 2013 and 2012, total restricted stock, restricted stock unit and performance share
compensation expense was $34.8, $19.3 and $14.3, respectively.
The following table shows a summary of non-vested shares for the year ended December 31, 2014:
Number of
Shares
Weighted-
Average
Grant Date
Fair Value
Non-vested at January 1, 2014 0.8 $ 90.70
Granted 0.6 91.77
Vested (0.2) 90.62
Canceled (0.1) 90.61
Non-vested at December 31, 2014 1.1 $ 91.30
As of December 31, 2014, there was $40.0 of total unrecognized compensation cost related to non-vested restricted stock,
restricted stock unit and performance share-based compensation arrangements granted under the Company's stock incentive plans.
That cost is expected to be recognized over a weighted average period of 1.7 years.
Employee Stock Purchase Plan
The Company has an employee stock purchase plan, begun in 1997 and amended in 1999, 2004, 2008 and 2012, with 6.3
shares of common stock authorized for issuance. The plan permits substantially all employees to purchase a limited number of
shares of Company stock at 85% of market value. The Company issues shares to participating employees semi-annually in January
and July of each year. Approximately 0.2 shares were purchased by eligible employees in 2014, 2013 and 2012, respectively. For
2014, 2013 and 2012, expense related to the Company’s employee stock purchase plan was $4.0, $3.5 and $4.9, respectively.
The Company uses the Black-Scholes model to calculate the fair value of the employee’s purchase right. The fair value of the
employee’s purchase right and the assumptions used in its calculation are as follows:
2014 2013 2012
Fair value of the employee’s purchase right $ 19.48 $ 17.22 $ 23.02
Valuation assumptions
Risk free interest rate 0.1% 0.1% 0.1%
Expected volatility 0.2 0.2 0.2
Expected dividend yield — — —
15. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved from time to time in various claims and legal actions, including arbitrations, class actions, and other
litigation (including those described in more detail below), arising in the ordinary course of business. Some of these actions involve
claims that are substantial in amount. These matters include, but are not limited to, intellectual property disputes, professional
liability, employee-related matters, and inquiries, including subpoenas and other civil investigative demands, from governmental
agencies and Medicare or Medicaid payers and managed care payers reviewing billing practices or requesting comment on
allegations of billing irregularities that are brought to their attention through billing audits or third parties. The Company receives
civil investigative demands or other inquiries from various governmental bodies in the ordinary course of its business. Such
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)