Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity

Stockholders' Equity

(3)Stockholders’ Equity

In May 2006, the Company adopted the 2006 Equity Incentive Plan (2006 Plan), which was amended by Amendment No. 1 dated May 9, 2007.  The primary purpose of the 2006 Plan is to encourage ownership in the Company by key personnel, whose long-term service is considered essential to the Company’s continued success.  The 2006 Plan reserves 6,000,000 shares of the Company’s common stock for issuance to employees, directors, or consultants.  The maximum aggregate number of shares that may be issued under the 2006 Plan through the exercise of incentive stock options (Options) is 4,500,000.  Pursuant to the Deferred Stock Unit Compensation Plan, a Sub Plan under the 2006 Plan, a participant may elect to defer settlement of their outstanding unvested awards until such time as elected by the participant.

The Company has elected to grant nonvested stock units (NSUs) annually to key personnel.  The NSUs granted entitle the employee recipients to receive shares of common stock in the Company upon vesting of the NSUs.  The vesting of all NSUs is subject to achievement of certain performance targets.  For NSUs granted in 2012 and 2011, one-third of these awards will vest at the end of each of the three years after the performance goals are achieved.  On a quarterly basis, the Company grants fully-vested shares of its common stock to each of its outside directors.  The fair value of such shares is expensed on the date of issuance.

In February 2012, the Company approved a new stock repurchase program to repurchase up to $100,000 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 and the program could be suspended at any time at the Company’s discretion.  During the three months ended June 30, 2012, the Company repurchased approximately 1,475,000 shares under this program, for approximately $80,000, or an average price of $54.26.  During the six months ended June 30, 2012, the Company repurchased approximately 1,749,000 shares under this program, for approximately $100,000, or an average price of $57.19.  As of June 30, 2012, the Company had repurchased the full amount authorized under this program.  The purchases were funded from available working capital.

In June 2012, the Company approved a new stock repurchase program to repurchase up to $200,000 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 does not obligate the Company to acquire any particular amount of common stock and the program may be suspended at any time at the Company’s discretion.  As of June 30, 2012, the Company had not repurchased any stock under this new program.  Through August 8, 2012, the Company repurchased 636,000 shares under this program, for approximately $26,800, or an average price of $42.13, leaving the remaining approved amount at $173,200.

During the three months ended June 30, 2012, the Company granted 128,000 NSUs under the 2006 Plan, at a weighted-average grant-date fair value of $63.19 per share.  During the six months ended June 30, 2012, the Company granted 192,000 NSUs under the 2006 Plan, at a weighted-average grant-date value of $63.09.  As of June 30, 2012, future unrecognized compensation cost for these awards, excluding estimated forfeitures, is $5,350.  As of June 30, 2012, the Company believed that the achievement of at least the threshold performance objective of these awards was probable, and therefore recognized compensation expense accordingly for these awards.

In May 2012, the Board of Directors of the Company adopted a new long-term incentive award under its 2006 Equity Incentive Plan (2012 LTIP 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, 2015 only if the Company meets certain revenue targets ranging between $2,200,000 and $2,900,000 and certain diluted earnings per share targets ranging between $7.00 and $10.50 for the year ended December 31, 2015.  No vesting of any 2012 LTIP Award will occur if either of the threshold performance criteria is not met for the year ending December 31, 2015.  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, during the three months ended June 30, 2012, the Company granted a maximum amount of 351,338 RSUs.  The grant date fair value of these RSUs was $56.12 per share.   As of June 30, 2012, the Company believed that the achievement of at least the threshold performance objective of these awards was probable, and therefore recognized compensation expense accordingly for these awards.  As of June 30, 2012, future unrecognized compensation cost for these awards, excluding estimated forfeitures, is $10,093.

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

	Retained
	Earnings
Balance at December 31, 2011	$	692,595
Net loss attributable to Deckers Outdoor Corporation	(12,252		)
Repurchase of common stock	(99,983		)
Balance at June 30, 2012	$	580,360