CarMax 2016 Annual Report Download - page 66
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(B) Share Repurchase Program
In fiscal 2013, our board of directors authorized the repurchase of up to $800 million of our common stock which was exhausted
in fiscal 2015. In fiscal 2015, our board of directors authorized the repurchase of up to an additional $3 billion of our common
stock of which $1 billion was exhausted during fiscal 2016, and $2 billion expires on December 31, 2016.
Common Stock Repurchases
Years Ended February 29 or 28
2016 2015 2014
Number of shares repurchased (in thousands) 16,300.1 17,511.0 6,859.5
Average cost per share $ 59.59 $ 52.13 $ 44.61
Available for repurchase, as of end of year (in millions) $ 1,398.0 $ 2,369.3 $ 282.1
(C) Stock Incentive Plans
We maintain long-term incentive plans for management, certain employees and the nonemployee members of our board of
directors. The plans allow for the granting of equity-based compensation awards, including nonqualified stock options, incentive
stock options, stock appreciation rights, restricted stock awards, stock- and cash-settled restricted stock units, stock grants or a
combination of awards. To date, we have not awarded any incentive stock options.
As of February 29, 2016, a total of 50,200,000 shares of our common stock had been authorized to be issued under the long-term
incentive plans. The number of unissued common shares reserved for future grants under the long-term incentive plans was
6,738,122 as of that date.
The majority of associates who receive share-based compensation awards primarily receive cash-settled restricted stock
units. Senior management and other key associates receive awards of nonqualified stock options and stock-settled restricted stock
units. Nonemployee directors receive awards of nonqualified stock options, stock grants and/or restricted stock awards. Excluding
stock grants, all share-based compensation awards, including any associated dividend rights, are subject to forfeiture.
Nonqualified Stock Options. Nonqualified stock options are awards that allow the recipient to purchase shares of our common
stock at a fixed price. Stock options are granted at an exercise price equal to the fair market value of our common stock on the
grant date. The stock options generally vest annually in equal amounts over periods of one to four years. These options expire
no later than ten years after the date of the grant.
Cash-Settled Restricted Stock Units. Also referred to as restricted stock units, or RSUs, these are restricted stock unit awards that
entitle the holder to a cash payment equal to the fair market value of a share of our common stock for each unit granted. Conversion
generally occurs at the end of a three-year vesting period. However, the cash payment per RSU will not be greater than 200% or
less than 75% of the fair market value of a share of our common stock on the grant date. RSUs are liability awards and do not
have voting rights.
Stock-Settled Market Stock Units. Also referred to as market stock units, or MSUs, these are restricted stock unit awards with
market conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each
unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio is calculated by dividing
the average closing price of our stock during the final 40 trading days of the three-year vesting period by our stock price on the
grant date, with the resulting quotient capped at two. This quotient is then multiplied by the number of MSUs granted to yield the
number of shares awarded. MSUs do not have voting rights.
Stock-Settled Performance Stock Units. Also referred to as performance stock units, or PSUs, these are restricted stock unit
awards with performance conditions granted to eligible key associates that are converted into between zero and two shares of
common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio
is based on the company reaching certain target levels set by the board of directors for cumulative three-year earnings before
interest and taxes at the end of the three-year period, with the resulting quotient subject to meeting a minimum 25% threshold and
capped at 200%. This quotient is then multiplied by the number of PSUs granted to yield the number of shares awarded. PSUs
do not have voting rights.
Restricted Stock Awards. Restricted stock awards (RSAs) are awards of our common stock that are subject to specified restrictions
that generally lapse after a one-year period from date of grant. Participants holding restricted stock are entitled to vote on matters
submitted to holders of our common stock for a vote.