Advance Auto Parts 2011 Annual Report Download - page 92

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 1, 2011, January 2, 2010 and January 3, 2009
(in thousands, except per share data)
.
F-38
The fair value of each share of performance-based restricted stock is determined based on the market price of
the Company’s common stock on the date of grant. The weighted average fair value of shares granted during Fiscal
2010, 2009 and 2008 was $64.74, $39.53 and $32.21 per share, respectively. At January 1, 2011, the maximum
potential payout under the Company’s currently outstanding performance-based restricted stock awards was 487
shares.
Deferred Stock Units
The Company grants share-based awards annually to its Board of Directors in connection with its annual
meeting of stockholders. The Company grants DSUs as provided for in the Advance Auto Parts, Inc. Deferred Stock
Unit Plan for Non-Employee Directors and Selected Executives, or the DSU Plan. Each DSU is equivalent to one
share of common stock of the Company. The DSUs vest evenly over a twelve-month period following the grant
date. Prior to Fiscal 2009, the DSUs vested immediately upon issuance. The DSUs are held on behalf of the director
until he or she ceases to be a director. The DSUs are then distributed to the director following his or her last date of
service. Additionally, the DSU Plan provides for the deferral of compensation as earned in the form of (i) an annual
retainer for directors, and (ii) wages for certain highly compensated employees of the Company. These deferred
stock units are settled in common stock with the participants at a future date, or over a specified time period as
elected by the participants in accordance with the DSU Plan.
The Company granted 23 DSUs in Fiscal 2010. The weighted average fair value of DSUs granted during Fiscal
2010, 2009, and 2008 was $49.27, $44.18, and $38.94, respectively. The DSUs are awarded at a price equal to the
market price of the Company’s underlying stock on the date of the grant. For Fiscal 2010, 2009, and 2008,
respectively, the Company recognized a total of $1,064, $850, and $480 on a pre-tax basis, in compensation expense
for these DSU grants.
LTIP Availability
At January 1, 2011, there were 2,348 shares of common stock currently available for future issuance under the
2004 Plan and was based on management’s current estimate of the probable vesting outcome for performance-based
awards. The Company issues new shares of common stock upon exercise of stock options and SARs. Availability is
determined net of forfeitures and is reduced by an additional 0.7 availability factor for restricted stock and DSUs in
accordance with the LTIP. Availability includes shares which became available for reissuance in connection with
the exercise of SARs.
Employee Stock Purchase Plan
The Company also offers an ESPP. Eligible Team Members may purchase the Company’s common stock at
95% of its fair market value on the date of purchase. There are annual limitations on Team Member elections of
either $25 per Team Member or ten percent of compensation, whichever is less. Under the plan, Team Members
acquired 41, 51 and 80 shares in Fiscal 2010, 2009 and 2008, respectively. At January 1, 2011, there were 1,236
shares available to be issued under the plan.