Dollar General 2009 Annual Report Download - page 112

DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Share-based payments (Continued)
Through January 29, 2010, all Time Options and Performance Options have been granted to
employees. During the fourth quarter of 2009, the Company granted 33,051 non-qualified stock options
to members of its Board of Directors. These options vest ratably on an annual basis over a four year
period from the date of grant.
In January 2008, the Company granted 508,572 nonvested restricted shares to its Chief Executive
Officer. As a result of the Company’s initial public offering these shares vested, at a total fair value
equal to $11.5 million. Subsequent to the offering, the Company granted a total of 9,084 restricted
stock unit awards to members of its Board of Directors. For 2009, 2008 and the 2007 Successor period,
the share-based compensation expense related to nonvested shares before income taxes was $3.3 million
($2.0 million net of tax), $1.1 million ($0.7 million net of tax) and less than $0.1 million, respectively.
At January 29, 2010, the total compensation cost related to nonvested restricted stock awards not yet
recognized was approximately $0.2 million.
All nonvested restricted stock and restricted stock unit awards granted in the periods presented
had a purchase price of zero. 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 unit awards granted under the plan to non-employee directors during 2009
are scheduled to vest in one-third increments at each of the Company’s three subsequent annual
shareholder meetings. The nonvested restricted stock and restricted stock unit awards granted under
the plan to employees during the 2007 Predecessor period were originally scheduled to vest and
become payable ratably over a three-year period from the respective grant dates. The nonvested
restricted stock unit awards granted under the plan to non-employee directors during the 2007
Predecessor period were originally scheduled to vest over a one-year period from the respective grant
dates, but became payable as a result of the Merger as discussed above.
12. Related party transactions
Affiliates of certain of the Investors participated as (i) lenders in the Company’s Credit Facilities
discussed in Note 7; (ii) initial purchasers of the Company’s Notes discussed in Note 7;
(iii) counterparties to certain interest rate swaps discussed in Note 8 and (iv) as advisors in the Merger.
Certain fees were paid upon closing of the Merger to affiliates of certain of the Investors. These fees
primarily included underwriting fees, advisory fees, equity commitment fees, syndication fees, Merger
and acquisition fees, sponsor fees, costs of raising equity, and out of pocket expenses. The aggregate
fees paid to these related parties during the Successor period ended February 1, 2008 totaled
$134.9 million, portions of which have been capitalized as debt financing costs or as direct acquisition
costs.
The Company believes affiliates of KKR and Goldman, Sachs & Co. (among other entities) are
lenders under, and Citicorp North America, Inc. serves as administrative agent and collateral agent for,
the Term Loan Facility. The amount of principal outstanding under the Term Loan Facility from the
date of the Merger to September 30, 2009, was $2.3 billion. The Company paid principal of
$336.5 million during the remainder of 2009 and approximately $74.8 million, $133.4 million, and
$102.9 million of interest on the Term Loan Facility during 2009, 2008, and the 2007 Successor period,
respectively.
101