Dollar General 2006 Annual Report Download - page 84

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A summary of activity related to nonvested restricted stock and restricted stock unit
awards during the year ended February 2, 2007 is as follows:
Nonvested
Shares
Weighted Average
Grant Date
Fair Value
Balance, February 3, 2006 363,687 $ 19.66
Granted 571,603 15.20
Vested (149,066) 18.01
Canceled (37,593) 18.76
Balance, February 2, 2007 748,631 $ 16.63
The purchase price was set at zero for all nonvested restricted stock and restricted stock
unit awards granted in the year ended February 2, 2007. The Company records compensation
expense on a straight-line basis over the restriction period based on the market price of the
underlying stock on the date of grant. The nonvested restricted stock and restricted stock unit
awards granted under the plan to employees during the year ended February 2, 2007 are
scheduled to vest and become payable ratably over a three-year period from the respective grant
dates, except for a restricted stock unit grant made to the Company’ s Chairman and Chief
Executive Officer in the third quarter of fiscal 2006 which is scheduled to vest ratably over a
three-year period from the grant date but which is not payable until after he ceases to be
employed by the Company. The nonvested restricted stock unit awards granted under the plan to
non-employee directors during the year ended February 2, 2007 are scheduled to vest over a one-
year period from the respective grant dates, but become payable only after the recipient ceases to
serve as a Board member (or upon a change-in-control as discussed above).
The Company accounts for nonvested restricted stock and restricted stock unit awards in
accordance with the provisions of SFAS 123(R). Under the provisions of SFAS 123(R),
unearned compensation is not recorded within shareholders’ equity, and accordingly, during the
year ended February 2, 2007, the Company reversed its unearned compensation balance as of
February 3, 2006 of approximately $5.2 million, with an offset to common stock and additional
paid-in capital. The Company recognized compensation expense relating to its nonvested
restricted stock and restricted stock unit awards of approximately $4.0 million, $2.4 million and
$1.8 million in 2006, 2005 and 2004, respectively. At February 2, 2007, the total compensation
cost related to nonvested restricted stock and restricted stock unit awards not yet recognized was
approximately $9.1 million.
There have been no modifications to any of the Company’ s outstanding share-based
payment awards during the year ended February 2, 2007. The Company recognized total
compensation expense relating to share-based awards of approximately $7.6 million, $3.3
million and $1.8 million in 2006, 2005 and 2004, respectively.
11. Capital stock
The Company has a Shareholder Rights Plan (the “Plan”), filed with the Securities and
Exchange Commission, under which Series B Junior Participating Preferred Stock Purchase
Rights (the “Rights”) were issued for each outstanding share of common stock. The Rights were
attached to all common stock outstanding as of March 10, 2000. On May 8, 2000, we effected a
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