|
NOTE 14—EQUITY COMPENSATION PLANS
The Company has stock-based compensation plans, under which it grants stock options and restricted stock units to key employees and members of its Board of Directors. The Company generally recognizes compensation expense on a straight-line basis over the vesting period.
The following table summarizes the options under the Company’s plan:
|
|
|
Number of Shares |
|
|
Outstanding — January 29, 2011 |
|
1,831,802 |
|
|
Granted |
|
265,139 |
|
|
Exercised |
|
(28,226 |
) |
|
Forfeited |
|
(2,483 |
) |
|
Expired |
|
(30,683 |
) |
|
Outstanding — July 30, 2011 |
|
2,035,549 |
|
In the first half of fiscal year 2011, the Company granted approximately 265,000 stock options with a weighted average grant date fair value of $5.38. These options have a seven year term and vest over a three year period with a third vesting on each of the three grant date anniversaries. The compensation expense recorded during the thirteen weeks and twenty-six weeks ended July 30, 2011, for the options granted was minimal.
In the first half of fiscal year 2010, the Company granted approximately 303,000 stock options with a weighted average grant date fair value of $4.26. These options have a seven year term and vest over a three year period with a third vesting on each of the three grant date anniversaries. The compensation expense recorded during the thirteen and twenty-six weeks ended July 31, 2010, for the options granted was minimal.
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatilities for a time period similar to that of the expected term blended with market based implied volatility at the time of the grant. The risk-free rate is based on the U.S. treasury yield curve for issues with a remaining term equal to the expected term.
The following are the weighted-average assumptions:
|
|
|
July 30, 2011 |
|
July 31, 2010 |
|
|
Dividend yield |
|
1.04 |
% |
1.35 |
% |
|
Expected volatility |
|
58.17 |
% |
55.71 |
% |
|
Risk-free interest rate range: |
|
|
|
|
|
|
High |
|
1.90 |
% |
2.01 |
% |
|
Low |
|
1.60 |
% |
1.71 |
% |
|
Ranges of expected lives in years |
|
4 - 5 |
|
4 - 5 |
|
RESTRICTED STOCK UNITS
Performance Based Awards
In the first quarter of fiscal 2011, the Company granted approximately 95,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal year 2013. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal year 2013. The fair value for these awards was $12.48 at the date of the grant. The compensation expense recorded for these restricted stock units was minimal during the thirteen weeks and twenty-six weeks ended July 30, 2011.
In the first quarter of fiscal 2010, the Company granted approximately 105,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal year 2012. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal year 2012. The fair value for these awards was $10.34 at the date of the grant. The compensation expense recorded for these restricted stock units during the thirteen weeks and twenty-six weeks ended July 30, 2011 and July 31, 2010, was minimal.
Market Based Awards
In the first quarter of fiscal 2011, the Company granted approximately 48,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target in fiscal 2013. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $14.73 grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen weeks and twenty-six weeks ended July 30, 2011, was minimal.
In the first quarter of fiscal 2010, the Company granted approximately 52,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target in fiscal 2012. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $12.99 grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen weeks and twenty-six weeks ended July 30, 2011 and July 31, 2010, was minimal.
Other Awards
In the first quarter of fiscal 2011 and 2010, the Company granted approximately 50,000 and 61,000 restricted stock units related to officers’ deferred bonus matches under the Company’s non-qualified deferred compensation plan, which vest over a three year period.
In the second quarter of fiscal 2011, the Company granted approximately 42,000 restricted stock units to its non-employee directors of the board that vested immediately. The fair value was $10.67 per unit and the Company recognized compensation expense of approximately $0.4 million for these restricted stock units.
In the second quarter of fiscal 2010, the Company granted approximately 52,000 restricted stock units to its non-employee directors of the board that vested immediately. The fair value was $9.55 per unit and the Company recognized compensation expense of approximately $0.5 million for these restricted stock units.
The following table summarizes the units under the Company’s plan, assuming maximum vesting of underlying shares for the performance and market based awards described above:
|
|
|
Number of RSUs |
|
|
Nonvested — January 29, 2011 |
|
432,331 |
|
|
Granted |
|
321,314 |
|
|
Forfeited |
|
(3,051 |
) |
|
Vested |
|
(99,911 |
) |
|
Nonvested — July 30, 2011 |
|
650,683 |
| |