Dollar General 2008 Annual Report Download - page 107

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options or shares received upon exercise of the Time Options or Performance Options at amounts
that differ based upon the reason for the termination. In particular, in the event that the employee
resigns “without good reason” (as defined in the management stockholder’ s agreement), then any
options whether or not then exercisable are forfeited and any shares received upon prior exercise
of such options are callable at the Company’ s option at an amount equal to the lesser of fair
value or the amount paid for the shares (i.e. the exercise price). In such cases, because the
employee would not benefit in any share appreciation over the exercise price, for accounting
purposes, under SFAS 123(R) such options are not considered vested until the expiration of the
Company’ s call option, which is generally five years subsequent to the date of grant.
Accordingly, all references to the vesting provisions or vested status of the options discussed in
this note give effect to the vesting pursuant to the provisions of SFAS 123(R) and may differ
from descriptions of the vesting status of the Time Options and Performance Options located
elsewhere in the Company’ s Annual Report on Form 10-K.
Each of the Company’ s management-owned shares, Rollover Options, and vested new
options include certain provisions by which the holder of such shares, Rollover Options, or
vested new options may require the Company to repurchase such instruments in limited
circumstances. Specifically, each such instrument is subject to a repurchase right for a period of
365 days after termination due to the death or disability of the holder of the instrument that
occurs generally within five years from the date of grant. In such circumstances, the holder of
such instruments may require the Company to repurchase any shares at the fair market value of
such shares and any Rollover Options or vested new options at a price equal to the intrinsic value
of such Rollover or vested new options. Because the Company does not have control over the
circumstances in which it may be required to repurchase the outstanding shares or Rollover
Options, such shares and Rollover Options, valued at $9.7 million and $4.2 million, respectively,
at January 30, 2009, and at $6.0 million and $3.2 million, respectively, at February 1, 2008 have
been classified as Redeemable common stock in the accompanying consolidated balance sheets
as of these dates. The values of these equity instruments are based upon the fair value and
intrinsic value of the underlying stock and Rollover Options at the date of issuance. Because
redemption of such shares is uncertain, such shares are not subject to re-measurement until their
redemption becomes probable.
In addition to the repurchase rights upon death or disability that are common to all
management held shares, Rollover Options, and vested new options, the management
stockholder’ s agreement which the Company entered into with certain executive officers
provided such officers with an additional repurchase right in the event their employment
terminated for any reason prior to the expiration of this repurchase right on July 21, 2008. Such
executive officers could have required the Company to repurchase their outstanding shares and
Rollover Options at a price of $5 per share in the case of shares and the difference in $5 per share
and the exercise price of any Rollover Options that they hold. This repurchase right existed for a
period of 365 days following termination of employment within the required timeframe. As
noted above, each of the shares, whether held by general members of management or executive
officers, has been classified within Redeemable common stock on the accompanying
consolidated balance sheet as of January 30, 2009 and February 1, 2008. In the case of the
Rollover Options held by the executive officers, however, the additional repurchase rights in the
event of termination of employment prior to July 21, 2008 were considered within the control of