LensCrafters 2007 Annual Report Download - page 158

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 157 <
11. STOCK OPTION AND INCENTIVE PLANS
Stock option plan
Beginning in April 1998, certain officers and other key employees of the Company and its subsidiaries
were granted stock options of Luxottica Group S.p.A. under the Company’s stock option plans (the
“plans”). The aggregate number of shares permitted to be granted under these plans to the
employees is 23,044,300. The Company believes that the granting of options to these key employees
better aligns the interest of such employees with those of the shareholders. Prior to 2006, under the
older plans the stock options were granted at a price that was equal to or greater then market value
of the shares at the date of grant. Under the 2005 and 2006 plans, options were granted at the greater
of (i) either the previous 30 day average stock price immediately before the date of grant or (ii) the
price on the grant date depending on certain regulatory requirements of the country where the
employee receiving the option is located. These options become exercisable in either three equal
annual installments, two equal annual installments in the second and third years of the three-year
vesting period or 100% vesting on the third anniversary of the date of grant. Certain options may
contain accelerated vesting terms if there is a change in ownership (as defined in the plans).
Prior to the adoption of SFAS 123 (R) on January 1, 2006, the Company applied APB 25, and as
such no compensation expense was recognized because the exercise price of the options was
equal to the fair market value on the date of grant. However, as some of those individuals were U.S.
citizens/taxpayers and as the exercise of such options created taxable income, the Company was
afforded a tax benefit in its US Federal tax return equal to the income declared by the individuals.
U.S. GAAP does not permit the aforementioned tax benefit to be recorded in the statement of
income. Therefore, such amount is recorded as a reduction of taxes payable and an increase to
additional paid-in capital. For the year ended December 31, 2005, the benefit recorded
approximated Euro 4.7 million.
(Euro/000) Before Adjustments After
application application
of SFAS no. 158 of SFAS no. 158
Prepaid pension
(intangible asset) (304) 2,254 1,950
Total assets 4,966,624 2,254 4,968,878
Current liability - SFAS No. 106 - 185 185
Current liability - pension benefits - 232 232
Total current liabilities 1,424,860 417 1,425,277
Long-term SFAS No. 106 4,055 (405) 3,650
Long-term pension benefits 45,961 17,583 63,544
Non-current deferred income taxes 48,202 (6,932) 41,270
Total long-term liabilities 1,317,507 10,246 1,327,753
Accumulated other comprehensive loss (280,184) (8,409) (288,593)
Total stockholders’ equity 2,224,258 (8,409) 2,215,849