Energizer 2007 Annual Report Download - page 34

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Energizer Holdings, Inc. 2007 Annual Report
September 30, 2007 or September 30, 2006. The weighted-average
fair value of options granted in fiscal 2005 was $15.27 per option.
This was estimated at the grant date using the Black-Scholes option-
pricing model with the following weighted-average assumptions:
2005
Risk-free interest rate 3.86%
Expected life of option 6 years
Expected volatility of ENR stock 22.2%
Expected dividend yield on ENR stock –
As of September 30, 2007, there was $1.0 of total unrecognized
compensation costs related to stock options granted, which will be
fully recognized during fiscal 2008. For outstanding nonqualified
stock options, the weighted average remaining contractual life
is 4.3 years.
The following table summarizes nonqualified ENR stock option
activity during the current year (shares in millions):
Weighted-Average
Shares Exercise Price
Outstanding on Oct. 1, 2006 3.81 $25.85
Exercised (1.54) 23.16
Cancelled (0.03) 22.52
Outstanding on Sept. 30, 2007 2.24 27.74
Exercisable on Sept. 30, 2007 1.81 $24.43
Restricted Stock Equivalents (RSE) In October 2005, the Board
of Directors approved two different grants of RSE. First, a grant to
key employees, included approximately 73,000 shares that vest rat-
ably over four years. The second grant for 80,000 shares was
awarded to a group of key senior executives and consists of two
pieces: 1) 25% of the total restricted stock equivalents granted vest
on the third anniversary of the date of grant; 2) the remainder
vests on the date that the Company publicly releases its earnings for
its 2008 fiscal year contingent upon the Company’s compound
annual growth in earnings per share (CAGR) for the three-year
period ending on September 30, 2008. If a CAGR of 10% is
achieved, an additional 25% of the grant vests. The remaining 50%
will vest in its entirety on the third anniversary of the grant date,
only if the Company achieves a CAGR at or above 15%, with
smaller percentages of that remaining 50% vesting if the Company
achieves a CAGR between 11% and 15%. The total award expected
to vest is amortized over the vesting period.
In October 2006, the Board of Directors approved two grants of
RSE. First, a grant to key employees included 112,350 shares that
vest ratably over four years. The second grant for 303,000 shares
was awarded to key senior executives with similar performance
and vesting requirements to the RSE award granted in 2005,
as described above.
The Company records estimated expense for the performance-
based grants based on the cumulative program-to-date CAGR for
each respective program unless evidence exists that a different ulti-
mate CAGR is likely to occur.
The following table summarizes RSE activity during the current
year (shares in millions):
Weighted-Average
Grant Date
Shares Fair Value
Nonvested RSE at Oct.1, 2006 0.53 $42.44
Granted 0.41 73.68
Vested (0.11) 44.57
Cancelled (0.04) 68.52
Nonvested RSE at Sept. 30, 2007 0.79 $57.34
As of September 30, 2007, there was $28.7 of total unrecognized
compensation costs related to RSE granted under the Plan, which
will be recognized over a weighted-average period of approximately
1.1 years. The weighted-average fair value for RSE granted in 2007,
2006 and 2005 was $73.68, $52.81 and $48.90, respectively. The fair
value of RSE vested in 2007, 2006 and 2005 was $9.2, $6.9
and $1.9, respectively.
In October 2007, the Company granted RSE awards to key
employees included approximately 283,000 shares that vest ratably
over four years. At the same time, the Company granted RSE
awards to key senior executives totaling approximately 272,000
which vest as follows: 1) 25% of the total restricted stock equiva-
lents granted vest on the third anniversary of the date of grant; 2)
the remainder vests on the date that the Company publicly releases
its earnings for its 2010 fiscal year contingent upon the Company’s
compound annual growth in earnings per share (CAGR) for the
three-year period ending on September 30, 2010. If a CAGR of
15% is achieved, the remaining 75% of the grant vests, with smaller
percentages of the remaining 75% vesting if the Company achieves
a CAGR between 8% and 15%. The total award expected to vest
is amortized over the vesting period.
Other Share-Based Compensation During the quarter ended
December 31, 2005, the Board of Directors approved an award for
officers of the Company. This award totaled 196,800 share equiva-
lents and has the same features as the restricted stock award
granted to senior executives in October 2005 as discussed above,
but will be settled in cash and mandatorily deferred until the indi-
vidual’s retirement or other termination of employment. During
2007, 20,000 shares were forfeited leaving 176,800 nonvested shares
at September 30, 2007. The total award expected to vest is amor-
tized over the three-year vesting period and the amortized portion
is recorded at the closing market price of ENR stock at each period
end. As of September 30, 2007, there was $7.1 of total unrecog-
nized compensation costs related to this award. The related liability
is reflected in Other Liabilities in the Company’s Consolidated
Balance Sheet.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)