Quarterly report pursuant to Section 13 or 15(d)

Equity Based Compensation

v2.3.0.15
Equity Based Compensation
 9 Months Ended
Oct. 01, 2011
Equity Based Compensation [Abstract]  
Equity Based Compensation

NOTE G — EQUITY BASED COMPENSATION

 

Equity-based compensation expense for the quarters ended October 2, 2010, and October 1, 2011, was $2,967 and $2,937, respectively.  The related tax benefit for these periods was $1,180 and $1,073, respectively.  Expense for the nine months ended October 2, 2010, and October 1, 2011, was $7,107 and $7,739, respectively.  The related tax benefit for these periods was $2,693 and $2,824, respectively.

 

During the nine months ended October 1, 2011, certain executives left the Company, which resulted in the cancelation of these executives' equity awards. The recapture of equity compensation expense related to the cancelation of unvested equity awards reduced equity-based compensation expense for the nine months ended October 1, 2011 by $1,230. The related tax impact for these cancelations was $424.

 

The following table shows the remaining unrecognized compensation expense on a pre-tax basis for all types of equity awards that were outstanding as of October 1, 2011.  This table does not include an estimate for future grants that may be issued.
 
Remainder of 2011    $          2,800    
2012              10,027    
2013                6,448    
2014                4,475    
2015 and beyond                2,828    
     $        26,578    
         
The cost above is expected to be recognized over a weighted-average period of 2.1 years.

 

During the nine months ended October 1, 2011, the Company's shareholders approved a 5,000 increase in the number of new shares authorized for issuance under the Company's 2006 Equity Incentive Award Plan (the "2006 Plan"). This increase brings the total shares authorized under the 2006 Plan to 10,000. The 2006 Plan is currently the only plan utilized by the Company for the issuance of equity awards. As of October 1, 2011, a total of 5,363 units had been issued under this plan, comprising 5,241 stock-settled stock appreciation rights, 114 deferred stock units, and 8 stock options. Also, as of October 1, 2011, 811 units had been canceled and added back to the number of units available for issuance under the 2006 Plan.

 

A summary of the Company's stock option and stock-settled stock appreciation right activity for the nine months ended October 1, 2011 is as follows:

 

    Shares   Weighted-average grant price   Weighted-average remaining contractual term   Aggregate intrinsic value*
Outstanding at January 1, 2011                4,047    $          32.46                           3.5    $        45,263
Granted                   417                28.83        
Exercised                   (57)                28.66        
Canceled or expired                 (607)                32.29        
                 
Outstanding at October 1, 2011                3,800    $          32.15                           3.1    $          2,623
                 
Exercisable at October 1, 2011                1,562    $          32.50                           2.6    $          1,273
                 
*   Aggregate intrinsic value is defined as the difference between the current market value at the reporting date (the closing
price of the Company's common stock on the last trading day of the period) and the exercise price of awards that were
in-the-money.  The closing price of the Company's common stock at January 1, 2011 and October 1, 2011, was $43.45 and

$27.50, respectively.

 

                

               The weighted-average fair value of stock-settled stock appreciation rights that were granted during the nine-month periods ended October 2, 2010, and October 1, 2011 was $17.07 and $12.40, respectively.  The total intrinsic value of awards that were exercised during the nine-month periods ended October 2, 2010, and October 1, 2011 was $6,057 and $555, respectively.

 

The following table includes weighted-average assumptions that the Company has used to calculate the fair value of equity awards that were granted during the periods indicated.  Deferred stock units are full-value shares at the date of grant and have been excluded from the table below:

 

    Quarter Ended   Nine Months Ended
    October 2,   October 1,   October 2,   October 1,
    2010   2011   2010   2011
                 
Expected volatility   54.8%   56.0%   54.9%   56.0%
Risk-free interest rate   1.4%   1.1%   1.7%   1.1%
Expected life    4.2 yrs.     3.8 yrs.     4.2 yrs.     3.9 yrs. 
Expected dividend yield   -   -   -   -
Weighted-average grant price   $43.73   $28.16   $38.23   $28.83

A summary of the Company's deferred stock unit activity for the nine months ended October 1, 2011 is as follows:

    Shares   Weighted-average Fair Value  
Nonvested at January 1, 2011                   100    $          44.29  
Granted                        -    $                -    
Vested                   (49)    $          44.29  
Canceled or expired                     (2)    $          44.29  
           
Nonvested at October 1, 2011                     49    $          44.29