Share-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 03, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement, Noncash Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation | Share-Based Compensation Under the Brunswick Corporation 2014 Stock Incentive Plan, the Company may grant stock appreciation rights (SARs), non-vested stock units, and performance awards to executives, other employees and non-employee directors from treasury shares and from authorized, but unissued, shares of common stock initially available for grant, as well as from: (i) the forfeiture of past stock units and awards; (ii) shares not issued upon the net settlement of SARs; or (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to stock units and awards. As of July 3, 2021, 4.7 million shares remained available for grant.
Share grant amounts, fair values, and fair value assumptions reflect all outstanding stock units and awards for both continuing and discontinued operations.
Non-Vested Stock Units
The Company grants both stock-settled and cash-settled non-vested stock units to key employees as determined by management and the Human Resources and Compensation Committee of the Board of Directors. The Company granted nominal stock units during the three months ended July 3, 2021 and June 27, 2020, respectively. The Company granted 0.2 million and 0.3 million of stock units during the six months ended July 3, 2021 and June 27, 2020, respectively. The Company recognizes the cost of non-vested stock units on a straight-line basis over the requisite vesting period. Additionally, cash-settled non-vested stock units are recorded as a liability on the balance sheet and adjusted to fair value each reporting period through stock compensation expense. The Company recorded compensation expense for non-vested stock units of $4.4 million and $7.3 million during the three and six months ended July 3, 2021, respectively, and recorded compensation expense for non-vested stock units of $4.4 million and $6.4 million during the three and six months ended June 27, 2020, respectively.
As of July 3, 2021, there was $19.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The Company expects this cost to be recognized over a weighted average period of 1.4 years.
Performance Awards
The Company did not grant any performance shares for the three months ended July 3, 2021 and granted a nominal number of performance shares for the three months ended June 27, 2020. The company granted 0.2 million and 0.1 million performance shares to certain senior executives for the six months ended July 3, 2021 and June 27, 2020, respectively. Performance share awards are based on three performance measures: a cash flow return on investment (CFROI) measure, an operating margin (OM) measure and a total shareholder return (TSR) modifier. Performance shares are earned based on a three-year performance period commencing at the beginning of the calendar year of each grant. The performance shares earned are then subject to a TSR modifier based on the Company's stock returns measured against stock returns of a predefined comparator group over a
three-year performance period. Additionally, in February 2021 and 2020, the Company granted 24,560 and 26,750 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding the TSR modifier. The Company recorded compensation expense of $4.3 million and $7.5 million during the three and six months ended July 3, 2021, respectively, and recorded compensation expense of $4.5 million and $2.4 million during the three and six months ended June 27, 2020, respectively, based on projections of probable attainment of the performance measures and the projected TSR modifier used to determine the performance awards.
The fair value of the senior executives' performance share award grants with a TSR modifier for grants in 2021 and 2020 was $91.44 and $64.72, respectively. The fair values were estimated using the Monte Carlo valuation model, and incorporated the following assumptions:
The fair value of certain officers' and certain senior managers' performance awards granted based solely on the CFROI and OM performance factors was $87.48 and $61.91 in 2021 and 2020, respectively, which was equal to the stock price on the date of grant in 2021 and 2020, respectively, less the present value of expected dividend payments over the vesting period.
As of July 3, 2021, the Company had $13.3 million of total unrecognized compensation cost related to performance awards. The Company expects this cost to be recognized over a weighted average period of 1.3 years.
Director Awards
The Company issues stock awards to non-employee directors in accordance with the terms and conditions determined by the Nominating and Corporate Governance Committee of the Board of Directors. A portion of each director's annual fee is paid in Brunswick common stock, the receipt of which may be deferred until a director retires from the Board of Directors. Each director may elect to have the remaining portion paid in cash, in Brunswick common stock distributed at the time of the award, or in deferred Brunswick common stock with a 20 percent premium.
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