Estee Lauder 2002 Annual Report Download - page 73

2002 2001 2000
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
(Shares in thousands)
Outstanding at beginning of year 23,393.2 $34.55 21,914.1 $33.14 15,439.1 $22.80
Granted at fair value 2,175.3 39.07 2,709.5 42.80 7,902.2 50.88
Exercised (435.4) 17.85 (806.0) 16.50 (1,188.5) 15.28
Cancelled or Expired (289.6) 46.38 (424.4) 48.19 (238.7) 41.06
Outstanding at end of year 24,843.5 35.10 23,393.2 34.55 21,914.1 33.14
Options exercisable at year-end 13,149.5 27.59 8,497.6 21.69 4,252.4 18.86
Weighted-average fair value of options
granted during the year $16.02 $17.01 $20.14
THEEST{E LAUDER COMPANIES INC.
On September 18, 1998, the Company’s Board of
Directors authorized a share repurchase program. The
Company has purchased, and may continue to purchase,
over an unspecified period of time, a total of up to eight
million shares of Class A Common Stock in the open
market or in privately negotiated transactions, depending
on market conditions and other factors.
NOTE 14 – STOCK PROGRAMS
The Company has established the fiscal 2002 Share Incen-
tive Plan, the Fiscal 1999 Share Incentive Plan, the Fiscal
1996 Share Incentive Plan and the Non-Employee Direc-
tor Share Incentive Plan (collectively, the “Plans”) and,
additionally, has made available stock options and share
units that were, or will be, granted pursuant to these Plans
and certain employment agreements. These stock-based
compensation programs are described below.
Total net compensation income attributable to the
granting of share units and the related decrease in value
of existing share units was $0.2 million in fiscal 2002. Total
net compensation expense attributable to the granting of
share units and the increase in value of existing share units
was $0.7 million and $1.6 million in fiscal 2001 and 2000,
respectively.
Share Incentive Plans
The Plans provide for the issuance of 30,750,000 shares
to be awarded in the form of stock options, stock appre-
ciation rights and other stock awards to key employees
and stock options, stock awards and stock units to non-
employee directors of the Company. As of June 30, 2002,
12,311,500 shares of Class A Common Stock were
reserved and were available to be granted pursuant to the
Plans. The exercise period for all stock options generally
may not exceed ten years from the date of grant. Pursuant
to the Plans, stock option awards in respect of 2,175,300,
2,709,500 and 6,252,300 shares were granted in fiscal
2002, 2001 and 2000, respectively, and share units in
respect of 50,000 and 43,100 shares were granted in
fiscal 2002 and 2001, respectively. During fiscal 2002,
40,700 share units were cancelled without the issuance
of any shares, but the value of such units was transferred
to a deferred compensation account. Generally, the stock
option awards become exercisable at various times
through January 2006, while the share units will be paid
out in shares of Class A Common Stock at a time to be
determined by the Company.
In addition to awards made by the Company, certain
outstanding stock options were assumed as part of the
October 1997 acquisition of Sassaby. Of the 221,200
originally issued options to acquire shares of the
Company’s Class A Common Stock, 15,104 were out-
standing as of June 30, 2002, all of which were exercis-
able and will expire through May 2007.
Executive Employment Agreements
The executive employment agreements provide for the
issuance of 11,400,000 shares to be awarded in the form
of stock options and other stock awards to certain key
executives. The Company has reserved 663,000 shares of
its Class A Common Stock pursuant to such agreements
as of June 30, 2002. In accordance with such employment
agreements,stock option awards in respect of 1,650,000
shares were granted in fiscal 2000, and approximately 900
share units were granted in fiscal 2002 and 2001, and
33,700 share units were granted in fiscal 2000. The
reserve is solely for dividend equivalents on units granted
pursuant to one of the agreements. Most of the stock
options granted pursuant to the agreements are exercis-
able and expire at various times from November 2005
through July 2009. The share units will be paid out in
shares of Class ACommon Stock at a time to be deter-
mined by the Company, but no later than 90 days subse-
quent to the termination of employment of the executive.
Asummary of the Company’s stock option programs
as of June 30, 2002, 2001 and 2000, and changes during
the years then ended, is presented below:
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