Energizer 2009 Annual Report Download - page 37

ENERGIZER HOLDINGS INC. 2009 ANNUAL REPORT PAGE 35
The Company uses the straight-line method of recognizing compen-
sation cost. Total compensation cost charged against income for the
Company’s share-based compensation arrangements was $15.3,
$26.4 and $25.3 for the years ended September 30, 2009, 2008 and
2007, respectively, and was recorded in SG&A expense. The total
income tax benefit recognized in the Consolidated Statements of
Earnings for share-based compensation arrangements was $5.6, $9.6
and $9.2 for the years ended September 30, 2009, 2008 and 2007,
respectively. Restricted stock issuance and shares issued for stock
option exercises under the Company’s share-based compensation
program are generally issued from treasury shares.
Options As of September 30, 2009, the aggregate intrinsic value of
stock options outstanding and stock options exercisable was $43.8
and $43.6, respectively. The aggregate intrinsic value of stock options
exercised for the years ended September 30, 2009, 2008 and 2007
was $9.3, $36.7 and $107.8, respectively. When valuing new grants,
Energizer uses an implied volatility, which reflects the expected volatility
for a period equal to the expected life of the option. No new option
awards were granted in the years ended September 30, 2009, 2008
and 2007.
As of September 30, 2009, there was no unrecognized compensation
costs related to stock options granted. For outstanding nonqualified
stock options, the weighted average remaining contractual life
is 3.1 years.
The following table summarizes nonqualified ENR stock option activity
during the current fiscal year (shares in millions):
Shares
Weighted-
Average
Exercise
Price
Outstanding on October 1, 2008 1.57 $31.24
Exercised (0.25) 21.94
Outstanding on September 30, 2009 1.32 $33.06
Exercisable on September 30, 2009 1.30 $32.90
In October 2009, the Company granted non-qualified stock options to
purchase 266,750 shares of ENR stock to certain executives and key
employees of the Company. The options vest on the third anniversary
of the date of the grant, but may accelerate and become exercis-
able before that date upon the recipient’s death or disability or upon
a change in control. The options remain exercisable for 10 years from
the date of grant. However, this term may be reduced under certain
circumstances including the recipient’s termination of employment.
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 awarded to a group of
key senior executives vested October 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 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 of the RSE did not vest.
In October 2007, the Company granted RSE awards to key employees
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 executives
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.
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.
In February 2009, the Company granted RSE awards to key senior
executives totaling approximately 296,000 shares. These awards were
granted in lieu of (i) each executive’s continued participation in the
2009 annual cash bonus program, (ii) his or her right to receive accru-
als under the Company’s Supplemental Executive Retirement Plan (an
excess pension plan) for calendar year 2009, and (iii) his or her right to
receive Company matching accruals under the Company’s Executive
Savings Investment Plan (an excess 401(k) plan) for the 2009 calendar
year. Vesting of the equivalents occurred on November 16, 2009, and
the number of shares which vested was contingent upon achievement
of individual and Company performance targets for the period from
October 1, 2008 through September 30, 2009. The total award which
vested was 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.