Hasbro 2006 Annual Report Download - page 70

Common Stock
In May 2005, the Company’s Board of Directors authorized the repurchase of up to $350,000 in common
stock. In 2006, the remaining portion of this authorization was fully utilized and an additional $350,000 was
authorized by the Board of Directors in July 2006. Purchases of the Company’s common stock may be made
from time to time, subject to market conditions, and may be made in the open market or through privately
negotiated transactions. The Company has no obligation to repurchase shares under the authorization and the
timing, actual number, and the value of the shares which are repurchased will depend on a number of factors,
including the price of the Company’s common stock. These authorizations replace all prior authorizations. In
2006, the Company repurchased 22,767 shares at an average price of $20.03. The total cost of these
repurchases, including transaction costs, was $456,744.
(10) Stock Options, Restricted Stock and Warrants
Hasbro has reserved 19,291 shares of its common stock for issuance upon exercise of options and the
grant of other awards granted or to be granted under stock incentive plans for employees and for non-
employee members of the Board of Directors (collectively, the “plans”). These options generally vest in equal
annual amounts over three to five years. The plans provide that options be granted at exercise prices not less
than fair market value on the date the option is granted and options are adjusted for such changes as stock
splits and stock dividends. Generally, options are exercisable for periods of no more than ten years after date
of grant. Certain of the plans permit the granting of awards in the form of stock options, stock appreciation
rights, stock awards and cash awards in addition to options. Upon exercise in the case of stock options, grant
in the case of restricted stock or vesting in the case of performance based contingent stock grants, shares are
issued out of available treasury shares. Additionally, the Company has reserved 17,450 shares of its common
stock for issuance upon exercise of outstanding warrants.
The Company on occasion will issue restricted stock and grant deferred restricted stock units to certain
key employees. In 2006, the Company issued restricted stock of 20 shares. No restricted stock or deferred
restricted stock awards were granted in 2005 or 2004. These shares or units are nontransferable and subject to
forfeiture for periods prescribed by the Company. These awards are valued at the market value at the date of
grant and are subsequently amortized over the periods during which the restrictions lapse, generally 3 years.
Amortization of unearned compensation expense relating to the outstanding restricted stock and deferred
restricted stock was $158, $74, and $138 in fiscal 2006, 2005, and 2004, respectively. At December 31, 2006,
the amount of total unrecognized compensation cost related to restricted stock is $293 and the weighted
average period over which this will be expensed is 24.5 months.
In July 2006, as part of its annual equity grant to executive officers and certain other employees, the
Company’s Board of Directors approved the issuance of contingent stock performance awards (the “Stock
Performance Awards”), which provide the recipients with the ability to earn shares of the Company’s common
stock based on the Company’s achievement of stated cumulative diluted earnings per share and cumulative net
revenue targets over a ten quarter period beginning July 3, 2006 and ending December 28, 2008. Each Stock
Performance Award has a target number of shares of common stock associated with such award which may be
earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets. The
Compensation Committee of the Company’s Board of Directors has discretionary power to reduce the amount
of the award regardless of whether the stated targets are met. If the Company achieves 100% of the stated
targets, it would expect to issue 738 shares under these awards.
During 2006, the Company recognized $2,390 of expense relating to these awards. If minimum targets, as
detailed under the award, are not met, no additional compensation cost will be recognized and any previously
recognized compensation cost will be reversed. These awards were valued at the market value at the date of
grant and are being amortized over the 10 quarter period from July 3, 2006 through December 28, 2008. The
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)