Stockholders' Equity

9 Months Ended

Sep. 30, 2011

Stockholders' Equity

Stockholders' Equity

(2) Stockholders’ Equity

In June 2009, the Company approved a stock repurchase program to repurchase up to $50,000 of the Company’s common stock in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.  The program did not obligate the Company to acquire any particular amount of common stock.  The purchases were funded from available working capital.  As of June 30, 2011, the Company had repurchased the full amount authorized under this program.  During the nine months ended September 30, 2011, the Company repurchased approximately 245,000 shares for approximately $20,000, or an average price of $81.22 per share.

On June 22, 2011, the Board of Directors of the Company adopted a new long-term incentive award under its 2006 Equity Incentive Plan (the “Level III Awards”).  These awards will be available for issuance to current and future members of the Company’s management team, including the Company’s named executive officers.  Each recipient will receive a specified maximum number of restricted stock units (RSUs), each of which will represent the right to receive one share of the Company’s common stock.  These awards vest subject to certain long-term performance objectives and certain long-term service conditions.  The awards will vest on December 31, 2014 only if the Company meets certain revenue targets ranging between $1,850,000 and $2,500,000 and certain diluted earnings per share targets ranging between $7.00 and $9.60 for the year ended December 31, 2014.  No vesting of any Level III Award will occur if either of the threshold performance criteria is not met for the year ending December 31, 2014.  To the extent financial performance is achieved above the threshold levels, the number of RSUs that will vest will increase up to the maximum number of units granted under the award.  Under this new program, the Company granted zero and a maximum amount of 275,000 RSUs during the three and nine months ended September 30, 2011, respectively.  The grant date fair value of these RSUs was $82.09 per share.  As of September 30, 2011, the Company did not believe that the achievement of the performance objectives for the Level III Awards was probable, and therefore the Company did not recognize compensation expense for these awards.  If the performance objectives become probable, the Company will then begin recording an expense for the Level III Awards and would recognize a cumulative catch-up adjustment in the period they become probable.

During the three months ended September 30, 2011, 110,000 stock appreciation rights (SARs) were exercised at a weighted-average exercise price of $26.73, for an aggregate intrinsic value of $8,611.  During the nine months ended September 30, 2011, 290,000 SARs were exercised at a weighted-average exercise price of $26.73, for an aggregate intrinsic value of $19,535.

The following is a reconciliation of the Company’s retained earnings:

	Retained Earnings
Balance at December 31, 2010	$	513,459
Net income attributable to Deckers Outdoor Corporation	74,323
Repurchase of common stock	(19,916		)
Balance at September 30, 2011	$	567,866