Stock Plans and Management Compensation |
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| Share-Based Payment Arrangement, Noncash Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Plans and Management Compensation | Stock Plans and Management Compensation On May 3, 2023, the Company's shareholders approved the Brunswick Corporation 2023 Stock Incentive Plan (Plan), which replaced the Company's 2014 Stock Incentive Plan. Under the Plan, the Company may grant stock options, stock appreciation rights (SARs), non-vested stock units, performance awards, and other share-based or cash-based awards to executives, other employees, non-employee directors and persons expected to become officers, other employees and non-employee directors with shares from treasury shares and from authorized, but unissued, shares of common stock initially available for grant, in addition to: (i) the forfeiture of past 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 awards. As of December 31, 2023, 3.6 million shares remained available for grant.
Share grant amounts, fair values and fair value assumptions reflect all outstanding 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. Non-vested stock units have vesting periods of three years. Non-vested stock units are eligible for dividends, which are reinvested, and are non-voting. All non-vested units have restrictions on the sale or transfer of such awards during the vesting period.
Generally, grants of non-vested stock units are forfeited if employment is terminated prior to vesting. Non-vested stock units vest pro rata over one year if (i) the grantee has attained the age of 62, as long as the grantee also has a minimum of three years of continuous service from his or her most recent hire date, or (ii) the grantee's age plus total years of service equals 70 or more.
The Company recognizes the cost of non-vested stock units on a straight-line basis over the requisite service 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. During the years ended December 31, 2023, 2022 and 2021, the Company charged $20.4 million, $18.2 million and $16.3 million, respectively, to compensation expense for non-vested stock units. The related income tax benefit recognized in 2023, 2022 and 2021 was $5.0 million, $4.5 million and $4.0 million, respectively. The fair value of shares vested during 2023, 2022 and 2021 was $24.5 million, $16.7 million and $11.3 million, respectively.
The weighted average price per non-vested stock unit at grant date was $88.00, $93.62 and $91.14 for units granted in 2023, 2022 and 2021, respectively. Non-vested stock unit activity for the year ended December 31, 2023 was as follows:
As of December 31, 2023, there was $14.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. The Company expects this expense to be recognized over a weighted average period of 1.4 years.
Performance Awards
In 2023, 2022 and 2021, the Company granted performance shares to certain senior executives. 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 stock returns measured against stock returns of a predefined comparator group over a three-year performance period. Additionally, in 2023, 2022 and 2021, the Company granted 36,170, 24,320 and 24,560 performance shares, respectively, to certain officers and certain senior managers based on the respective measures and performance periods described above but excluding a TSR modifier.
The fair values of the senior executives' performance share award grants with a TSR modifier at the grant date in 2023, 2022 and 2021 were $88.47, $94.59 and $91.44, respectively, which 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 $83.97, $91.62 and $87.48, which was equal to the stock price on the date of grant in 2023, 2022 and 2021, respectively, less the present value of dividend payments over the vesting period.
The Company recorded compensation expense related to performance awards of $2.1 million, $3.6 million and $13.5 million in 2023, 2022 and 2021, respectively. The related income tax benefit recognized in 2023, 2022 and 2021 was $0.5 million, $0.9 million and $3.3 million, respectively. The fair value of awards vested during 2023, 2022 and 2021 was $16.2 million, $14.6 million and $18.6 million, respectively.
Performance award activity for the year ended December 31, 2023 was as follows:
As of December 31, 2023, the Company had $1.3 million of total unrecognized compensation expense related to performance awards. The Company expects this expense to be recognized over a weighted average period of 1.6 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 units with a 20 percent premium.
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