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Sensata Technologies Holding N.V.'s SEC Filings

S-1/A
SENSATA TECHNOLOGIES HOLDING PLC filed this Form S-1/A on 03/09/2010
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(in which case the options expire on the participant’s termination date) or due to death or disability (in which case the options expire on the date that is as much as six months after the participant’s termination date). In addition, the Company has a right, but not the obligation, to repurchase all or any portion of award securities issued to a participant at the then current fair value.

 

As a result of the Amendment to the Stock Option Plan during the three months ended September 30, 2009, all outstanding Tranche 3 awards as of the date of modification require the same specified return on the equity Sponsors’ investment as Tranche 2 awards. The Company accounted for the Amendment as a modification under ASC 718, which resulted in $9,014 of additional value. Upon consummation of a liquidity event, the Company will recognize a cumulative catch-up adjustment for the portion of the previously unrecognized compensation expense associated with the modified award that has time vested and will continue to recognize the remaining portion over the remaining requisite service period, regardless of whether or not the equity Sponsors achieve the specified returns.

 

The weighted-average grant-date fair value per share of the Tranche 2 options granted during fiscal years 2009, 2008 and 2007 was $5.96, $2.15 and $1.10, respectively. The weighted-average grant-date fair value per share of the Tranche 3 options granted during fiscal years 2009, 2008 and 2007 was $0.12, $1.43 and $0.66, respectively. The fair value of the Tranche 2 and 3 options was estimated on the grant date using the Monte Carlo Simulation Approach. Weighted-average key assumptions used in estimating the grant-date fair value of the options are as follows:

 

     For the year ended December 31,
         2009            2008            2007    

Expected dividend yield

   0%    0%    0%

Expected volatility

   33.24%    25.00%    25.00%

Risk-free interest rate

   0.39%    3.01%    4.52%

Expected term (years)

   6.6    6.6    6.6

Forfeiture rate

   11.00%    5.00%    5.00%

Assumed time to liquidity event (years)

   1.0    2.0    3.7

Probability IPO vs. disposition

   70% / 30%    70% / 30%    70% / 30%

 

Key assumptions, including the assumed time to liquidity and probability of an initial public offering versus a disposition, were based on management’s judgment with input from the Company’s Board of Directors.

 

Management has concluded that satisfaction of the performance conditions is presently not probable, based on principles established in guidance now codified within ASC 805 and, as such, no compensation expense has been recorded for these options for the years ended December 31, 2009, 2008 and 2007. In accordance with ASC 805, if a liquidity event occurs, the Company will be required to recognize compensation expense over the remaining requisite service period of the awards, including a cumulative catch-up adjustment for previously unrecognized compensation expense, regardless of whether or not the equity Sponsors achieve the specified returns. As of December 31, 2009, there was $21,242 of unrecognized compensation expense related to non-vested Tranche 2 options, including former Tranche 3 options which were effectively converted to Tranche 2 options during the three months ended September 30, 2009.

 

The Company granted the following share-based awards during the year ended December 31, 2009:

 

Grant Date

  Number of
options
  Number of
restricted
stock units
  Original
Exercise
Price
  Modified
Exercise
Price
  Fair value
of ordinary

shares on
date of grant
  Fair value of
ordinary
shares on
date of most
recent
modification
  Intrinsic
value per
share based
on fair value
of ordinary
shares as of
December 31,
2009
             

May 21, 2009(1)

  75,000     $ 6.30   $ 14.80   $ 6.30   $ 17.48   $ 5.23

September 4, 2009(2)

  950,000       7.00     14.80     14.80     17.48     5.23

December 9, 2009

  350,000       17.48     NA     17.48     NA     2.55

December 9, 2009

    380,900     NA     NA     17.48     NA     20.03

 

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