LensCrafters 2007 Annual Report Download - page 159

> 158 | ANNUAL REPORT 2007
The Company adopted SFAS 123(R) as of January 1, 2006, and at such point began expensing
stock options over their requisite service period based on their fair value as of the date of grant. For
the years ended December 31, 2007 and 2006, Euro 7.8 million and Euro 7.0 million, respectively,
of compensation expense has been recorded for these plans.
A summary of option activity under the Plans as of December 31, 2007, and changes during the
year then ended is as follows:
Number Weighted average Weighted average Aggregate
of options exercise price remaining intrinsic value
outstanding (denominated contractual (Euro 000s)
in Euro) terms
Outstanding as of December 31, 2006 9,300,685 14.15
Granted 1,745,000 24.03
Forfeitures (54,400) 14.45
Exercised (1,877,372) 10.09
Outstanding as of December 31, 2007 9,113,913 16.61 5.39 50,952
Exercisable at December 31, 2007 4,996,413 12.11 3.78 47,638
The weighted-average fair value of grant-date fair value options granted during the years 2007,
2006, and 2005 was Euro 6.03, Euro 5.72 and Euro 4.27, respectively.
The fair value of the stock options granted was estimated at the date of grant using a binomial lattice
model. The following table presents the weighted - average assumptions used in the valuation and
the resulting weighted average fair value per option granted:
2007 2006 2005
Dividend yield 1.43% 1.33% 1.54%
Risk-free interest rate 3.91% 3.11% 3.17%
Expected option life (years) 5.7 5.8 5.84
Expected volatility 23.70% 25.91% 25.92%
Weighted average fair value (Euro) 6.03 5.72 4.27
Expected volatilities are based on implied volatilities from traded share options on the Company's
stock, historical volatility of the Company's share price, and other factors. The expected option life
is based on the historical exercise experience for the Company based upon the date of grant and
represents the period of time that options granted are expected to be outstanding. The risk-free rate
for periods within the contractual life of the option is based on the U.S. Federal Treasury or European
government bond yield curve, as appropriate, in effect at the time of grant.
As of December 31, 2007 there was Euro 8.6 million of total unrecognized compensation cost
related to non-vested share-based compensation arrangements; that cost is expected to be
recognized over a period of 1.9 years.
Stock performance plans
In October 2004, under a Company performance plan, the Company granted options to acquire an
aggregate of 1,000,000 shares of the Company to certain employees of North American Luxottica
Retail Division which vested and became exercisable on January 31, 2007 as certain financial
performance measures were met over the period ending December 2006. At December 31, 2005,
there were options to acquire 1,000,000 shares (the closing ADR price at December 31, 2005 on
the New York Stock Exchange was US Dollar 25.31 per share) at an exercise price of US Dollar