LensCrafters 2009 Annual Report Download - page 92

> 90 | ANNUAL REPORT 2009
Contributions - The expected contributions for 2010 are expected to be immaterial for both the Company
and aggregate employee participants.
For 2009, a 10.5% (11.0% for 2008) increase in the cost of covered health care benefi ts was assumed. This
rate was assumed to decrease gradually to 5% for 2020 and remain at that level thereafter. The health
care cost trend rate assumption could have a signifi cant effect on the amounts reported. A 1% increase or
decrease in the health care trend rate would not have a material impact on the consolidated fi nancial state-
ments. The weighted-average discount rate used in determining the accumulated postretirement benefi t
obligation was 6.15% at December 31, 2009 and 6.3% at December 31, 2008.
The weighted-average discount rate used in determining the net periodic benefi t cost for 2009 and 2008,
was 6.3%, and 6.5%, respectively.
11.STOCK OPTION AND INCENTIVE PLANS
Stock Option Plan
Beginning in April 1998, certain offi cers 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 24,714,600.
The Company believes that the granting of options to these key employees strengthens their loyalty and
recognizes their contribution to the Group’s success. 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 percent 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 defi ned in the plans).
On May 7, 2009, the Board of Directors authorized the reassignment of new options to employees who
were then benefi ciaries of the Company’s 2006 and 2007 ordinary plans, which, considering market condi-
tions and the fi nancial crisis, had an exercise price that was undermining the performance incentives that
typically form the foundation of these plans. The new options’ exercise price was consistent with the market
values of Luxottica shares being equal to the greater of the stock price on the grant date of the new op-
tions or the previous 30 day average. In connection with the reassignment of options, the employees who
surrendered their options, received new options to purchase the same number of Luxottica Group ordinary
shares that were subject to the options he or she previously held for a total amount of 2,885,000 options.
For the new options assigned to the US benefi ciaries of the 2006 and 2007 plans, the Company recognized
an incremental fair value per share of Euro 2.16 and Euro 2.20 respectively. For the new options assigned
to the non-US benefi ciaries of the 2006 and 2007 plans, the Company recognized an incremental fair value
per share of Euro 2.68 and Euro 2.77 respectively.
The Company adopted, ASC 718, Stock Compensation (formerly SFAS No. 123(R), Share-Based Payment)
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, 2009, 2008 and 2007,
Euro 8.5 million, Euro 7.5 million and Euro 7.8 million, respectively, of compensation expense has been
recorded for these plans.
A summary of option activity under the plans as of December 31, 2009, and changes during the year then
ended is as follows: