Share-Based Compensation
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Dec. 29, 2012
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation: Overview The Company grants share-based compensation awards to its Team Members and members of its Board of Directors as provided for under the Company's 2004 Long-Term Incentive Plan, or LTIP. In Fiscal 2012, the Company switched from granting restricted stock to granting restricted stock units ("RSUs"). The Company currently grants share-based compensation in the form of stock appreciation rights ("SARs"), RSUs and deferred stock units ("DSUs"). The Company also has outstanding restricted stock granted prior to the transition to RSUs and outstanding stock options granted prior to Fiscal 2007. General Terms of Awards The Company's grants of SARs, RSUs and historically, restricted stock awards, generally include both a time-service portion and a performance-based portion, which collectively represent the target award. Time Vested Awards The SARs generally vest over a three-year period in equal annual installments beginning on the first anniversary of the grant date. All SARs granted are non-qualified, terminate on the seventh anniversary of the grant date and contain no post-vesting restrictions other than normal trading black-out periods prescribed by the Company's corporate governance policies. During the vesting period, holders of RSUs and restricted stock are entitled to receive dividends or in the case of RSUs, dividend equivalents, while holders of restricted stock are also entitled to voting rights. All RSU and restricted stock grants generally vest over a three-year period in equal annual installments beginning on the first anniversary of the grant date. For restricted stock, the shares are issued upon grant, but are restricted until they vest and cannot be sold by the recipient until the restriction has lapsed at the end of the respective vesting period. Performance-Based Awards Each performance award may vest following a three-year period subject to the Company's achievement of certain financial goals. The performance RSUs and restricted stock awards do not have dividend equivalent rights and do not have voting rights until earned and issued following the end of the applicable performance period. Depending on the Company's results during the three-year performance period, the actual number of shares vesting at the end of the period may range from 75% to 200% of the target award (50% to 200% for certain officers). Share-Based Compensation Expense & Cash Flows The expense the Company has incurred annually related to the issuance of share-based compensation is included in SG&A. The Company receives cash when Team Members purchase stock under the employee stock purchase plan ("ESPP"), as well as upon the exercise of stock options that were granted prior to Fiscal 2007. Total share-based compensation expense and cash received included in the Company's consolidated statements of operations and consolidated statement of cash flows, respectively, are reflected in the table below, including the related income tax benefits, for fiscal years ended December 29, 2012, December 31, 2011 and January 1, 2011 as follows:
As of December 29, 2012, there was $28,231 of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.6 years. The fair value of each SAR was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
Time-Based Share Awards Stock Appreciation Rights and Stock Options The following table summarizes the time-vested stock option and time-vested SARs activity for the fiscal year ended December 29, 2012:
The weighted average fair value of SARs granted during the during Fiscal 2012, 2011 and 2010 was $19.25, $19.81 and $19.10 per share, respectively. The aggregate intrinsic value reflected in the table above and the following page is based on the Company's closing stock price of $71.51 as of the last trading day of Fiscal 2012. The aggregate intrinsic value of stock options and SARs (the amount by which the market price of the stock on the date of exercise exceeded the exercise price) exercised during Fiscal 2012, 2011 and 2010 was $44,471, $33,779 and $35,447, respectively. Restricted Stock Units and Restricted Stock The following table summarizes the RSU and restricted stock activity for the fiscal year ended December 29, 2012:
The fair value of each RSU and restricted stock award is determined based on the market price of the Company's common stock on the date of grant. The weighted average fair value of RSUs and restricted shares granted during Fiscal 2012, 2011 and 2010 was $75.26, $67.79 and $64.58 per share, respectively. The total grant date fair value of RSUs and restricted shares vested during Fiscal 2012, 2011 and 2010 was $4,734, $10,548 and $8,317, respectively. Performance-Based Awards Performance-based awards granted in the following tables represent the performance portion of awards granted during Fiscal 2012 at the target level, as achievement of the target level was deemed probable as of the grant date. Change in units based on performance represents the change in number of awards previously granted that the Company believes will ultimately vest based on its probability assessment at December 29, 2012. Compensation expense for performance-based awards of $3,267, $6,714, and $5,916 in Fiscal 2012, 2011 and 2010, respectively, was determined based on management's estimate of the probable vesting outcome. Performance-Based SARs The following table summarizes the performance-based SARs activity for the fiscal year ended December 29, 2012:
The weighted average fair value of performance-based SARs granted during Fiscal 2012, 2011 and 2010 was $19.23, $19.86 and $19.10 per share, respectively. The aggregate intrinsic value of performance-based SARs exercised during Fiscal 2012 was $34,020. There were no awards exercised prior to Fiscal 2012. At December 29, 2012, the maximum potential payout under the Company's currently outstanding performance-based SAR awards was 2,480 units. Performance-Based Restricted Stock Units and Restricted Stock The following table summarizes the performance-based RSUs and restricted stock activity for the fiscal year ended December 29, 2012:
The fair value of each performance-based RSU and share of restricted stock is determined based on the market price of the Company's common stock on the date of grant. The weighted average fair value of performance-based RSUs or share of restricted stock granted during Fiscal 2012, 2011 and 2010 was $75.20, $67.16 and $67.74 per share, respectively. The total grant date fair value of performance-based restricted stock vested during Fiscal 2012 was $4,858. No awards vested prior to Fiscal 2012. At December 29, 2012, the maximum potential payout under the Company's currently outstanding performance-based RSUs was 513 shares. Deferred Stock Units The Company grants share-based awards annually to its Board of Directors in connection with its annual meeting of stockholders. These awards are granted in the form of DSUs as provided for in the Advance Auto Parts, Inc. Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives, or the DSU Plan. Each DSU is equivalent to one share of common stock of the Company. The DSUs are awarded in two equal portions, each with different schedules for conversion into common shares. The first type of DSUs is fully vested after one year of board service and is distributed in common shares after the director’s service on the board ends. The second type of DSUs is fully vested after one year of board service and is distributed in common shares after three years. Directors may choose to defer receipt of the second type of DSUs beyond the initial three years. Additionally, the DSU Plan provides for the deferral of compensation as earned in the form of (i) an annual retainer for directors, and (ii) wages for certain highly compensated Team Members of the Company. These DSUs are settled in common stock with the participants at a future date, or over a specified time period as elected by the participants in accordance with the DSU Plan. The Company granted 14 DSUs in Fiscal 2012. The weighted average fair value of DSUs granted during Fiscal 2012, 2011 and 2010 was $69.82, $62.99, and $49.27, respectively. The DSUs are awarded at a price equal to the market price of the Company's underlying stock on the date of the grant. For Fiscal 2012, 2011 and 2010, respectively, the Company recognized a total of $960, $1,008, and $1,064 on a pre-tax basis, in compensation expense for these DSU grants. LTIP Availability At December 29, 2012, there were 7,554 shares of common stock currently available for future issuance under the 2004 Plan based on management's current estimate of the probable vesting outcome for performance-based awards. The Company issues new shares of common stock upon exercise of stock options and SARs. Availability is determined net of forfeitures and is reduced by an additional 0.7 availability factor for restricted stock and DSUs in accordance with the LTIP. Availability also includes shares which became available for reissuance in connection with the exercise of SARs. Employee Stock Purchase Plan The Company also offers an ESPP. Eligible Team Members may purchase the Company's common stock at a discount to its fair market value on the date of purchase. During Fiscal 2012, the Company increased this discount from 5% to 10%. There are annual limitations on Team Member elections of either $25 per Team Member or ten percent of compensation, whichever is less. Under the plan, Team Members acquired 34, 38 and 41 shares in Fiscal 2012, 2011 and 2010, respectively. At December 29, 2012, there were 1,161 shares available to be issued under the plan. |