LensCrafters 2008 Annual Report Download - page 91

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 the 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. For the years ended
December 31, 2008, 2007 and 2006 Euro 0.0 million, Euro 0.2 million and Euro 1.9 million, respectively, of
compensation expense has been recorded for this plan.
In September 2004, the Company’s Chairman and majority shareholder, Mr. Leonardo Del Vecchio,
allocated shares held through La Leonardo Finanziaria S.r.l., an Italian holding company of the Del Vecchio
family, representing, at that time, 2.11 percent (or 9.6 million shares) of the Company’s currently authorized
and issued share capital, to a stock option plan for top management of the Company at an exercise price
of Euro 13.67 per share. The stock options to be issued under the stock option plan vested upon meeting
certain economic objectives in June 2006. For the year ended December 31, 2006 Euro 21.4 million of
compensation expense has been recorded for this plan.
In July 2006, under a Company performance plan, the Company granted options to acquire an aggregate
of 13,000,000 shares of the Company to certain top management positions throughout the Company
which vest and become exercisable as certain financial performance measures are met. Upon vesting the
employee will be able to exercise such options until they expire in 2016. Currently it is expected that these
performance conditions will be met. If these performance measures are not expected to be met no
additional compensation costs will be recognized and previous compensation costs recognized will be
reversed. In 2008 management revisited their estimate of the period when the targeted performance
measures are likely to be met. Based on the new estimate the vesting period has been postponed to
December 31, 2013. For the years ended December 31, 2008, 2007 and 2006, Euro 3.0 million, Euro 34.1
million and Euro 17.6 million, respectively, of compensation expense has been recorded for these plans.
A summary of option activity under the performance plans as of December 31, 2008, and changes during
the year then ended are as follows:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS |89 <
Weighted average Weighted average
Number exercise price remaining Aggregate
Performance Plans of options (denominated contractual intrinsic value
outstanding in Euro) Terms (Euro 000s)
Outstanding as of December 31, 2007 22,670,000 18.01
Granted 1,203,600
Forfeitures (100,000) 22.09
Exercised (20,000) 12,64
Outstanding as of December 31, 2008 23,753,600 17.1 6.37 15,362
Exercisable at December 31, 2008 9,650,000 13.66 5.55 15,362
The weighted-average fair value of grant-date fair value options granted during the year 2006 was Euro
5.13. There were no performance grants issued in 2007. In May 2008, a Performance Shares Plan for top
managers within the Group as identified by the Board of Directors of the Group (the “Board”) (the “2008
PSP”) was adopted. The 2008 PSP is intended to strengthen the loyalty of the Group’s key employees and
to recognize their contribution to the Group’s success on a medium-to long-term basis. The beneficiaries
of the 2008 PSP are granted the right to receive ordinary shares, without consideration, at the end of the
three-year vesting period, and subject to achievement of certain financial target as defined by the Board.
The 2008 PSP has a term of five years, during which time the Board may resolve to issue different grants
to the 2008 PSP’s beneficiaries. The 2008 PSP covers a maximum of 6,500,000 ordinary shares. Each annual
grant will not exceed 2,000,000 ordinary shares. On May 13, 2008, the Board granted 1,203,600 rights to
receive ordinary shares. Management believes that based, on the current estimates, the Group