Energizer 2008 Annual Report Download - page 37

ENERGIZER HOLDINGS, INC. 2008 Annual Report 35
The following table summarizes nonqualified ENR stock option activity
during the current year (shares in millions):
Shares
Weighted-
Average
Exercise
Price
Outstanding on October 1, 2007 2.24 $27.74
Exercised (0.66) 19.45
Cancelled (0.01) 26.70
Outstanding on September 30, 2008 1.57 31.24
Exercisable on September 30, 2008 1.47 $30.14
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 ratably
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 anni-
versary of the date of grant; 2) the remainder vests on the date that the
Company publicly releases its earnings for its 2008 fiscal year, which
was October 30, 2008, 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% vests in its
entirety 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 Company achieved
a CAGR in excess of the 15% target for the three year period ended
September 30, 2008. Thus, all performance shares for this particular
portion of the October 2005 grant vested on October 30, 2008.
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 total award expected to vest is amortized over the vesting period.
In October 2007, the Company granted RSE awards to key employ-
ees which included approximately 219,800 shares that vest ratably
over four years and 11,000 that vest ratably over two years. At the
same time, the Company granted RSE awards to key senior execu-
tives totaling approximately 267,000 shares which vest as follows: 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 2010 fiscal year
contingent upon the Company’s 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.
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 ultimate
CAGR is likely to occur.
The following table summarizes RSE activity during the current year
(shares in millions):
Shares
Weighted-
Average
Grant Date
Fair Value
Nonvested RSE at October 1, 2007 0.79 $57.34
Granted 0.53 116.08
Vested (0.10) 59.19
Cancelled (0.02) 96.07
Nonvested RSE at September 30, 2008 1.20 $82.24
As of September 30, 2008, there was an estimated $44.3 of total
unrecognized compensation costs related to RSE granted under
the Plan, which will be recognized over a weighted-average period
of approximately 1.4 years. The actual amount recognized may vary
depending on the actual CAGR achieved. The weighted-average fair
value for RSE granted in 2008, 2007 and 2006 was $116.08, $73.68
and $52.81, respectively. The fair value of RSE vested in 2008, 2007
and 2006 was $10.4, $9.2 and $6.9, respectively.
In October 2008, the Company granted RSE awards to key employees
which included approximately 265,200 shares that vest ratably over
four years. At the same time, the Company granted RSE awards to key
senior executives totaling approximately 374,600 which vest as follows:
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 2011 fiscal year
contingent upon the Company’s CAGR for the three year period ending
on September 30, 2011. 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 will be 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 equivalents
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 individual’s retirement
or other termination of employment. During 2007, 20,000 shares were
forfeited. All remaining 176,800 share equivalents fully vested as of
October 30, 2008 and the Company recorded pre-tax income of $4.4
in the first quarter of fiscal 2009 to reflect the mark to market for this
grant from October 1, 2008 through the October 30, 2008 vesting date.
9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company has several defined benefit pension plans covering
substantially all of its employees in the U.S. and certain employees in
other countries. The plans provide retirement benefits based on years
of service and earnings.
The Company also sponsors or participates in a number of other
non-U.S. pension arrangements, including various retirement and
termination benefit plans, some of which are required by local law or
coordinated with government-sponsored plans, which are not signifi-
cant in the aggregate and therefore are not included in the information
presented in the following tables.