Verizon Wireless 2014 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
60
NOTE 11
STOCKBASED COMPENSATION
Verizon Communications Long-Term Incentive Plan
The Verizon Communications Inc. Long-Term Incentive Plan (the Plan)
permits the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units, performance shares, performance stock units
and other awards. The maximum number of shares available for awards
from the Plan is 119.6 million shares.
Restricted Stock Units
The Plan provides for grants of Restricted Stock Units (RSUs) that gener-
ally vest at the end of the third year after the grant. The RSUs are classied
as equity awards because the RSUs will be paid in Verizon common stock
upon vesting. The RSU equity awards are measured using the grant date
fair value of Verizon common stock and are not remeasured at the end
of each reporting period. Dividend equivalent units are also paid to par-
ticipants at the time the RSU award is paid, and in the same proportion
as the RSU award.
Performance Stock Units
The Plan also provides for grants of Performance Stock Units (PSUs) that
generally vest at the end of the third year after the grant. As dened by
the Plan, the Human Resources Committee of the Board of Directors
determines the number of PSUs a participant earns based on the extent
to which the corresponding performance goals have been achieved
over the three-year performance cycle. The PSUs are classied as liability
awards because the PSU awards are paid in cash upon vesting. The PSU
award liability is measured at its fair value at the end of each reporting
period and, therefore, will fluctuate based on the price of Verizon
common stock as well as performance relative to the targets. Dividend
equivalent units are also paid to participants at the time that the PSU
award is determined and paid, and in the same proportion as the PSU
award. The granted and cancelled activity for the PSU award includes
adjustments for the performance goals achieved.
The following table summarizes Verizon’s Restricted Stock Unit and
Performance Stock Unit activity:
(shares in thousands)
Restricted
Stock Units
Performance
Stock Units
Outstanding January 1, 2012 19,836 27,614
Granted 6,350 20,537
Payments (7,369) (8,499)
Cancelled/Forfeited (148) (189)
Outstanding December 31, 2012 18,669 39,463
Granted 4,950 7,470
Payments (7,246) (22,703)
Cancelled/Forfeited (180) (506)
Outstanding December 31, 2013 16,193 23,724
Granted 5,278 7,359
Payments (6,202) (9,153)
Cancelled/Forfeited (262) (1,964)
Outstanding December 31, 2014 15,007 19,966
As of December 31, 2014, unrecognized compensation expense
related to the unvested portion of Verizon’s RSUs and PSUs was approxi-
mately $0.4 billion and is expected to be recognized over approximately
two years.
The RSUs granted in 2014 and 2013 have weighted-average grant date
fair values of $47.23 and $47.96 per unit, respectively. During 2014, 2013
and 2012, we paid $0.6 billion, $1.1 billion and $0.6 billion, respectively, to
settle RSUs and PSUs classied as liability awards.
Verizon Wireless’ Long-Term Incentive Plan
The Verizon Wireless Long-Term Incentive Plan (the Wireless Plan) pro-
vided compensation opportunities to eligible employees of Verizon
Wireless (the Partnership). Under the Wireless Plan, Value Appreciation
Rights (VARs) were granted to eligible employees. We have not granted
new VARs since 2004. As of December 31, 2014, there are no VARs that
remain outstanding.
Stock-Based Compensation Expense
After-tax compensation expense for stock-based compensation related
to RSUs, PSUs, and VARs described above included in Net income attrib-
utable to Verizon was $0.3 billion, $0.4 billion and $0.7 billion for 2014,
2013 and 2012, respectively.
Stock Options
The Plan provides for grants of stock options to participants at an option
price per share of no less than 100% of the fair market value of Verizon
common stock on the date of grant. Each grant has a 10-year life, vesting
equally over a three-year period, starting at the date of the grant. We
have not granted new stock options since 2004. As of December 31,
2014, there are no stock options that remain outstanding.