Einstein Bros 2008 Annual Report Download - page 54

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The value of a share from which appreciation is determined is 100% of the fair market value of a share on the date of grant and will be paid in
stock when they are exercised by the employee. The rights expire upon the earlier of termination date of the SAR Plan or termination of
employment, and typically vest over a two-year service period, and have a contractual life of five years. Generally, 50% of rights granted vest
based solely upon the passage of time. We recognize compensation costs for these awards using a graded vesting attribution method over the
requisite service period. The remaining 50% of rights granted vest based on financial performance. As of December 30, 2008, rights to
approximately 2,487 shares of our common stock, which are not yet exercisable, are subject to financial performance conditions. We will recognize
compensation costs for performance based stock appreciation rights over the requisite service period when conditions for achievement become
probable. For fiscal year 2007 and 2008, 26,487 and 21,841 shares, respectively, were canceled as we did not meet certain financial goals and the
related compensation expense that had been recorded during the year was reversed. Rights that do not vest are forfeited and are entered back into
the pool of shares to be distributed. As of December 30, 2008, there were 103,235 shares reserved for future issuance under the SAR Plan.
James W. Hood Stock Award Agreement
On May 3, 2007, our BOD adopted the James W. Hood Stock Award Agreement (the “Stock Award Plan”). The Stock Award Plan provided for
the issuance of 22,000 shares of our common stock to Mr. Hood as inducement for accepting employment with us as our Chief Marketing Officer.
The common stock award included 7,333 shares that have no restrictions, 7,333 shares that became unrestricted on the first anniversary and 7,334
shares that would become unrestricted on the second anniversary of the date of grant, provided that Mr. Hood was continuously employed by us on
those dates.
On November 25, 2008, Mr. Hood was no longer employed by the Company and the remaining 7,334 shares of restricted stock were forfeited. We
recognized compensation costs for these awards using a graded vesting attribution method over the requisite service period. Included in our total
stock-based compensation expense for fiscal years ended 2007 and 2008, was $271,000 and $0, respectively, related to this agreement.
Stock Option Activity
Transactions for the 1994 Plan, Directors’ Option Plan, the 2003 Plan, the 2004 Directors’ Plan and the Stock Award Plan during fiscal years
ended 2006, 2007 and 2008 were as follows:
Number of Options
Weighted-Average Exercise
Price
2006 2007 2008 2006 2007 2008
Outstanding, beginning of year 997,152 993,707 1,108,361 $ 3.31 $ 3.79 $ 8.06
Granted 202,500 554,314 391,738 5.24 13.24 10.55
Exercised (48,485) (260,392) (97,526) 2.88 3.91 4.14
Forfeited (157,460) (179,268) (201,131) 2.98 6.48 14.92
Outstanding, ending of year 993,707 1,108,361 1,201,442 $ 3.79 $ 8.06 $ 8.04
Exercisable and vested, end of year 623,662 637,993 730,033 $ 3.69 $ 4.57 $ 6.37
The aggregate intrinsic value of options exercised during 2006, 2007 and 2008 was $0.3 million, $3.4 million and $0.8 million, respectively.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Number
of
Options
Weighted-
Average
Grant
Date
Fair Value
Non-vested shares, January 1, 2008 470,368 $ 4.80
Granted 391,738 3.86
Vested (197,521) 4.36
Forfeited (193,176) 5.15