American Eagle Outfitters 2008 Annual Report Download - page 62

the options granted under the 1999 Plan vest over three years, 23% vest over five years and the remaining grants vest
over one year. All options expire after ten years. Performance-based restricted stock was earned if the Company met
established performance goals. The 1999 Plan terminated on June 15, 2005 with all rights of the awardees and all
unexpired awards continuing in force and operation after the termination.
2005 Stock Award and Incentive Plan
The 2005 Stock Award and Incentive Plan (the “2005 Plan”) was approved by the stockholders on June 15,
2005. The 2005 Plan authorized 18.4 million shares for issuance, of which 6.4 million shares are available for full
value awards in the form of restricted stock awards, restricted stock units or other full value stock awards and
12.0 million shares are available for stock options, stock appreciation rights, dividend equivalents, performance
awards or other non-full value stock awards. The 2005 Plan provides that the maximum number of shares awarded
to any individual may not exceed 6.0 million shares per year plus the amount of the unused annual limit of the
previous year. The 2005 Plan allows the Compensation Committee to determine which employees receive awards
and the terms and conditions of these awards. The 2005 Plan provides for grants to directors who are not officers or
employees of the Company, which are not to exceed 20,000 shares per year (not to be adjusted for stock splits).
Through January 31, 2009, 9.1 million non-qualified stock options, 2.9 million shares of restricted stock and
0.2 million shares of common stock had been granted under the 2005 Plan to employees and directors (without
considering cancellations to date of awards for 2.9 million shares). Approximately 99% of the options granted under
the 2005 Plan vest over three years and 1% vest over five years. Options were granted for ten and seven-year terms.
Approximately 97% of the restricted stock awards are performance-based and are earned if the Company meets
established performance goals. The remaining 3% of the restricted stock awards are time-based and vest over three
years.
Stock Option Grants
A summary of the Company’s stock option activity under all plans for Fiscal 2008 follows:
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
For the Year Ended January 31, 2009(1)
(In years) (In thousands)
Outstanding — February 2, 2008 .......... 12,915,576 $14.41
Granted............................. 3,514,653 $20.95
Exercised(2) ......................... 451,644 $ 8.44
Cancelled ........................... 1,481,851 $23.51
Outstanding — January 31, 2009 .......... 14,496,734 $15.25 4.1 $14,219
Vested and expected to vest — January 31,
2009 ............................. 14,160,412 $15.10 4.1 $14,217
Exercisable — January 31, 2009 .......... 6,261,165 $ 6.74 2.6 $14,208
(1) As of January 31, 2009, the Company had 5.5 million shares available for stock option grants.
(2) Options exercised during Fiscal 2008 ranged in price from $1.98 to $19.74.
The weighted-average grant date fair value of stock options granted during Fiscal 2008, Fiscal 2007 and Fiscal
2006 was $7.16, $10.64, and $7.59, respectively. The aggregate intrinsic value of options exercised during Fiscal
2008, Fiscal 2007 and Fiscal 2006 was $3.9 million, $22.5 million, and $73.4 million, respectively. Cash received
from the exercise of stock options and the actual tax benefit realized from stock option exercises were $3.8 million
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AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)