Cracker Barrel 2008 Annual Report Download - page 73

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The expected dividend yield is based on the Company’s
current dividend yield as the best estimate of projected
dividend yield for periods within the contractual life of
the option.
Year Ended
August 1, 2008 August 3, 2007 July 28, 2006
Dividend yield range 1.8% - 2.2% 1.2% - 1.4% 1.2% - 1.6%
Expected volatility 31% - 34% 30% - 31% 28% - 31%
Risk-free interest rate range 2.9% - 5.0% 4.4% - 5.2% 3.8% - 5.5%
Expected term (in years) 6.3 1.2-6.2 2.1-6.2
Nonvested and Restricted Stock
Nonvested stock grants consist of the Company’s common
stock and generally vest over 2-5 years. All nonvested stock
grants are time vested except the nonvested stock grants
of one executive that also were based upon Company
performance against a specified annual increase in earnings
before interest, taxes, depreciation, amortization and rent.
If any performance goals are not met, no compensation
cost is ultimately recognized and, to the extent previously
recognized, compensation cost is reversed. During 2008,
based on the Company’s determination that performance
goals would not be achieved for one executive’s nonvested
stock grants, the Company reversed approximately $3,508
of share-based compensation expense.
Generally, the fair value of each nonvested stock grant
is equal to the market price of the Company’s stock at the
date of grant reduced by the present value of expected
dividends to be paid prior to the vesting period, discounted
using an appropriate risk-free interest rate. Certain
nonvested stock grants accrue dividends and their fair value
is equal to the market price of the Company’s stock at the
date of the grant.
On August 1, 2008, the Company awarded 196,525 shares
of stock less shares withheld for taxes to certain executives
which vested immediately but were subject to restrictions
on resale for one to three years resulting in share-based
compensation expense of $4,436.
A summary of the Company’s nonvested and restricted
stock activity as of August 1, 2008, and changes during
2008 is presented in the following table:
(Shares in thousands)
Weighted-
Average
Grant Date
Nonvested and Restricted Stock Shares Fair Value
Unvested at August 3, 2007 400 $36.88
Granted 302 27.20
Vested (274) 25.92
Forfeited (168) 38.85
Unvested at August 1, 2008 260 $35.91
As of August 1, 2008, there was $7,916 of total
unrecognized compensation cost related to unvested share-
based compensation arrangements that is expected to be
recognized over a weighted-average period of 1.08 years.
Nonvested and restricted stock grants of 274,324 vested
during 2008.
Compensation Cost
Compensation cost for share-based payment arrangements
was $4,673, $6,360 and $9,900, respectively, for stock
options in 2008, 2007 and 2006. Included in the totals for
2007 and 2006 are share-based compensation from
continuing operations of $6,294 and $8,533, respectively,
for stock options. Compensation cost for nonvested
and restricted stock was $3,818, $6,357 and $3,539,
respectively, in 2008, 2007 and 2006. Included in the
totals for 2007 and 2006 are share-based compensation
from continuing operations of $6,837 and $3,140,
respectively for nonvested stock. Share-based compensation
from continuing operations is recorded in general and
administrative expenses. The total income tax benefit
recognized in the Consolidated Statement of Income for
2008, 2007 and 2006 for share-based compensation
arrangements was $2,564, $4,406 and $4,139, respectively.
In 2007, the Company modified certain share-based
compensation awards for eleven Logan’s employees. These
employees would have forfeited these unvested awards
upon Logan’s divestiture due to the performance and/or
service conditions of the awards not being met. The
modification of these awards consisted of the cancellation
of the Mid-Term Incentive Retention Plans (“MTIRP”)
and nonvested stock grants for these employees and the
concurrent grant of cash replacement awards for the
cancelled awards. No replacement awards for these
employees’ stock options were given and thus, the unvested