Bed, Bath and Beyond 2007 Annual Report Download - page 30

BED BATH& BEYOND ANNUAL REPORT 2007
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The following table details the effect on net earnings and earnings per share “as reported” and as if compensation expense
had been recorded through the end of the second quarter of fiscal 2005 based on the fair value method under SFAS No. 123,
“Accounting for Stock-Based Compensation” (“pro forma”). The reported and pro forma net earnings and earnings per share for
the years ended March 1, 2008 and March 3, 2007 are the same since stock-based compensation expense is calculated under the
provisions of SFAS No. 123R for those periods.
February 25,
(in thousands, except per share data) 2006
NET EARNINGS:
As reported $ 572,847
Deduct: Total stock-based employee compensation
expense determined under fair value based method,
net of related tax effects (31,415)
Add: Total stock-based employee compensation
expense included in net earnings, net of related tax effects 16,008
Pro forma $ 557,440
NET EARNINGS PER SHARE:
Basic:
As reported $ 1.95
Pro forma $ 1.90
Diluted:
As reported $ 1.92
Pro forma $ 1.87
Stock-based compensation expense for the fiscal year ended March 1, 2008 and March 3, 2007 was approximately $43.8 million
($28.4 million after tax or $0.11 per diluted share) and approximately $82.6 million ($52.6 million after tax or $0.18 per diluted
share), respectively. Stock-based compensation expense for the fiscal year ended March 3, 2007, included expenses related to the
cash payment of $30.0 million to remediate potential adverse tax consequences for Internal Revenue Code Section 409A and
approximately $8.2 million related to the revised measurement dates (See “Review of Equity Grants and Procedures and Related
Matters in Fiscal 2006” below). In addition, the amount of stock-based compensation cost capitalized for the year ended March 1,
2008 and March 3, 2007 was approximately $1.2 million and $1.7 million, respectively.
Incentive Compensation Plans
The Company currently grants awards under the Bed Bath & Beyond 2004 Incentive Compensation Plan (the “2004 Plan”). The
2004 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through stock options,
restricted stock awards, stock appreciation rights and performance awards, including cash awards. As a result, during fiscal 2007,
2006 and 2005, awards consisting of a combination of stock options and performance-based restricted stock were granted to
executive officers and other executives and awards consisting of restricted stock were granted to the Company’s other employees
who traditionally have received stock options. Awards of stock options and restricted stock generally vest in five equal annual
installments beginning one to three years from the date of grant.
Prior to fiscal 2004, the Company had adopted various stock option plans (the “Prior Plans”), all of which solely provided for the
granting of stock options. Upon adoption of the 2004 Plan, the common stock available under the Prior Plans became available
for issuance under the 2004 Plan. No further option grants may be made under the Prior Plans, although outstanding awards
under the Prior Plans will continue to be in effect.
Under the 2004 Plan and the Prior Plans, an aggregate of 83.4 million shares of common stock were authorized for issuance.
The Company generally issues new shares for stock option exercises and restricted stock awards. Under the 2004 Plan, grants are
determined by the Compensation Committee for those awards granted to executive officers and by an appropriate committee
for all other awards granted.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)