Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity

Stockholders' Equity

(3) Stockholders' Equity

In May2006, the Company adopted the 2006 Equity Incentive Plan (2006 Plan), which was amended by Amendment No.1 dated May9, 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 February2012, the Company approved a 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 six months ended June30, 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 June30, 2012, the Company had repurchased the full amount authorized under this program. The purchases were funded from available working capital.

In June2012, the Company approved a 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 September30, 2012, the Company had repurchased approximately 1,833,000 shares under this program, for approximately $84,700, or an average price of $46.24, leaving the remaining approved amount at $115,300.

During the three months ended September30, 2012, the Company granted 10,000 NSUs under the 2006 Plan, at a weighted-average grant-date fair value of $51.21 per share. During the nine months ended September30, 2012, the Company granted 202,000 NSUs under the 2006 Plan, at a weighted-average grant-date fair value of $62.49. As of September30, 2012, the Company believed that achievement of the minimum threshold performance criteria for these awards, which is based on fiscal year 2012 diluted earnings per share, was improbable. Accordingly, during the three months ended September30, 2012 the Company did not recognize compensation expense for these awards, and reversed compensation expense of $656 that had previously been recognized for these awards.

In May2012, 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 December31, 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 December31, 2015. No vesting of any 2012 LTIP Award will occur if either of the threshold performance criteria is not met for the year ending December31, 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 nine months ended September30, 2012, the Company granted awards that contain a maximum amount of 351,338 RSUs. The grant date fair value of these RSUs was $56.12 per share. As of September30, 2012, the Company believed that the achievement of at least the threshold performance objective of these awards was probable, and therefore recognized compensation expense for these awards. As of September30, 2012, future unrecognized compensation cost for these awards, excluding estimated forfeitures, was $8,556.

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

	Retained
	Earnings
Balance at December31, 2011	$	692,595
Net income attributable to Deckers Outdoor Corporation	30,809
Repurchase of common stock	(184,660		)
Balance at September30, 2012	$	538,744