Energizer 2003 Annual Report Download - page 36

Page 34 ENR 2003 ANNUAL REPORT
In fiscal 2003, the Board of Directors also approved the grants of
272,000 restricted stock equivalents which vest in one-third increments
every third year over a nine-year period to a group of officers and key
employees. The weighted-average fair value for restricted stock equiva-
lents granted in 2003, 2002 and 2001 was $28.52, $18.97 and
$19.94, respectively.
Under the terms of the Plan, option shares and prices, and restricted
stock and stock equivalent awards, are adjusted in conjunction with
stock splits and other recapitalizations so that the holder is in the same
economic position before and after these equity transactions.
Energizer also permits deferrals of bonus and salary, and for directors,
retainers and fees, under the terms of its Deferred Compensation Plan.
Under this plan, employees or directors deferring amounts into the
Energizer Common Stock Unit Fund are credited with a number of stock
equivalents based on the fair value of ENR stock at the time of deferral.
In addition, the participants were credited with an additional number
of stock equivalents, equal to 25% for employees and 33 1/3% for
directors, of the amount deferred. This additional company match
vests immediately for directors and three years from the date of initial
crediting for employees. Amounts deferred into the Energizer Common
Stock Unit Fund, and vested company matching deferrals, may be trans-
ferred to other investment options offered under the plan. At the time of
termination of employment, or for directors, at the time of termination of
service on the Board, or at such other time for distribution which may
be elected in advance by the participant, the number of equivalents
then credited to the participant’s account is determined and then an
amount in cash equal to the fair value of an equivalent number of
shares of ENR stock is paid to the participant.
Had the provisions of SFAS 123 been applied, Energizer’s net earnings
and earnings per share would have been reduced to the pro forma
amounts indicated in Note 2. The weighted-average fair value of options
granted in fiscal 2003, 2002 and 2001 was $9.37, $9.65 and $7.51
per option, respectively. This was estimated at the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
2003 2002 2001
Risk-free interest rate 3.47% 4.70% 4.90%
Expected life of option 7.5 years 7.5 years 7.5 years
Expected volatility of ENR stock 19.5% 19.0% 19.3%
Expected dividend yield on ENR stock – % – % – %
ENERGIZER HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
(Dollars in millions, except per share data)
A summary of nonqualified ENR stock options outstanding is as follows (shares in millions):
2003 2002 2001
Weighted-Average Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Outstanding on October 1, 7.69 $ 18.14 7.71 $ 17.54 7.37 $ 17.41
Granted 0.95 28.99 0.52 26.34 0.38 20.30
Exercised (1.52) 17.37 (0.52) 17.31 (0.01) 17.00
Cancelled ––(0.02) 19.80 (0.03) 20.00
Outstanding on September 30, 7.12 19.75 7.69 18.14 7.71 17.54
Exercisable on September 30, 3.36 $ 17.67 3.04 $ 17.52 1.62 $ 17.43
Information about ENR nonqualified options at September 30, 2003 is summarized below (shares in millions):
Outstanding Stock Options Exercisable Stock Options
Weighted-Average
Remaining
Contractual Life Weighted-Average Weighted-Average
Range of Exercise Prices Shares (Years) Exercise Price Shares Exercise Price
$16.81 to $25.05 5.80 6.7 $ 17.65 3.35 $ 17.63
$25.21 to $37.84 1.32 9.4 29.03 0.01 28.90
$16.81 to $37.84 7.12 7.2 $ 19.75 3.36 $ 17.67