Harris Teeter 2012 Annual Report Download - page 42

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Notes and its carrying amount outstanding as of October 2, 2012 and October 2, 2011 is as follows (in thousands):
2012 2011
Senior Notes – estimated fair value $127,730 $128,737
Senior Notes – carrying amount 100,000 100,000
12. CAPITAL STOCK
The capital stock of the Company authorized as of September 28, 2008 was 75,000,000 shares of no par value Common
Stock, 4,000,000 shares of Preference Stock (non-cumulative voting $0.56 convertible, $10 liquidation value), and 1,000,000
shares of Additional Preferred Stock. No shares of Preference Stock or Additional Preferred Stock were issued or outstanding
as of October 2, 2012 or October 2, 2011.
The Board of Directors adopted a stock buyback program in 1996, authorizing, at management’s discretion, the Company
to purchase and retire up to 10% of the then outstanding shares of the Company’s common stock for the purpose of preventing
dilution as a result of the operation of the Company’s comprehensive stock option and awards plans. Pursuant to this plan, the
Company purchased and retired 55,300 shares at a total cost of $1.5 million, or an average price of $26.97 per share during
fiscal 2010. There were no stock purchases in fiscal 2012 or fiscal 2011.
13. STOCK OPTIONS AND STOCK AWARDS
As of October 2, 2012, the Company had various equity incentive plans, which were approved by the Company’s
shareholders and authorized the issuance of 6.5 million shares of common stock pursuant thereto. Currently the Company grants
equity awards under the Harris Teeter Supermarkets, Inc. 2011 Incentive Compensation Plan, which was approved by the
Company’s shareholders in February 2011. After such time, no awards were granted under the Company’s prior equity incentive
plans, including without limitation the Harris Teeter Supermarkets, Inc. 2002 Comprehensive Stock Option and Award Plan
(and the Addendum thereto) and the Harris Teeter Supermarkets, Inc. 2000 Comprehensive Stock Option and Award Plan Prior
Plans, although outstanding awards previously granted under such prior plans will continue in effect in accordance with the
terms and conditions of those plans. As of October 2, 2012, the Company may grant additional options or stock awards and
performance shares in the amount of 2,393,000 shares.
The Board of Directors began approving equity awards in lieu of stock options in 2004. These awards have historically
been apportioned 50% as a fixed award of restricted stock (restricted from sale or transfer until vesting ratably over a five-year
period of continued employment) and 50% as performance share awards, based on the attainment of certain performance targets
for the ensuing fiscal year. If the fiscal year performance targets are met, the performance shares are subsequently issued as
restricted stock and vest over four years of continued employment.
Stock awards are being expensed ratably over the employees’ five-year requisite service period in accordance with the
graded vesting schedule, resulting in more expense being recognized in the early years. Compensation expense related to
restricted awards totaled $7,121,000, $8,073,000 and $6,104,000 for fiscal 2012, 2011 and 2010, respectively. The remaining
unamortized expense as of October 2, 2012 is $9,295,000, with a weighted average recognition period of 1.59 years.
Amortization of compensation costs related to stock options ceased in fiscal 2009, since all outstanding options had become
fully vested and no options were granted in fiscal 2012, 2011 or 2010.
A summary of the status of the Company’s restricted stock awards as of October 2, 2012, October 2, 2011 and
October 3, 2010, changes during the periods ending on those dates and weighted average grant-date fair value (WAGFV) is
presented below (shares in thousands):
Stock Awards October 2, 2012 October 2, 2011 October 3, 2010
Shares WAGFV Shares WAGFV Shares WAGFV
Non-vested at beginning of period 797 32.25 706 28.52 667 29.02
Granted 212 42.44 298 38.44 272 26.68
Vested (389) 31.71 (191) 28.29 (168) 28.03
Forfeited (20) 35.30 (16) 30.34 (65) 27.22
Non-vested at end of period 600 35.94 797 32.25 706 28.52
HARRIS TEETER SUPERMARKETS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
38