Lumber Liquidators 2008 Annual Report Download - page 64

The future minimum rental payments under non-cancellable operating leases, segregating ANO and Related
Companies leases from all other operating leases, were as follows at December 31, 2008:
Operating Leases
ANO and Related Companies
Store
Leases
Total
Operating
Leases
Store
Leases
Headquarters
Lease
2009 ............................................. $ 996 $ 1,033 $ 7,553 $ 9,582
2010 ............................................. 799 1,064 6,963 8,826
2011 ............................................. 425 1,096 6,014 7,535
2012 ............................................. 140 1,129 5,064 6,333
2013 ............................................. 54 1,163 3,270 4,487
Thereafter ........................................ 275 7,748 8,717 16,740
Total minimum lease payments ........................ $2,689 $13,233 $37,581 $53,503
NOTE 6. STOCK-BASED COMPENSATION
Stock-based compensation expense included in SG&A consisted of:
Year Ended December 31,
2008 2007 2006
Stock Options and Restricted Stock Awards ................................ $2,840 $2,733 $ 668
Variable Plan ......................................................... (2,960) 3,220 1,040
Regional Manager Plan ................................................. 129 258 —
Warrants ............................................................ — — (259)
Total ............................................................... $ 9 $6,211 $1,449
Overview
The Company has an equity incentive plan for employees, non-employee directors and other service
providers, the Lumber Liquidators, Inc. 2007 Equity Compensation Plan (the “2007 Plan”), from which it grants
stock options and restricted stock awards. The total number of shares of common stock authorized for issuance
under the 2007 Plan is 4.3 million. As of December 31, 2008, 1.9 million shares of common stock were available
for future grants. Stock options granted under the 2007 Plan expire no later than ten years from the date of grant
and the exercise price shall not be less than the fair market value of the shares on the date of grant. Vesting
periods are assigned to stock options and restricted stock awards on a grant by grant basis at the discretion of the
Board of Directors. The Company issues new shares of common stock upon exercise of stock options and vesting
of restricted stock.
The Company was party to a stock-based agreement between the Founder and his brother, Kevin Sullivan, a
regional manager until December 2008 (or “Kevin”), accounted for as a variable performance plan (the “Variable
Plan”) in accordance with the provisions of SFAS 123(R). The Variable Plan awarded Kevin the right (the
“Variable Right”) to an ownership percentage of common stock, contributed by the Founder. Under the Variable
Plan agreement, the Company was required to determine the number of shares of common stock exercisable
under the Variable Right at vesting. The Company recorded periodic stock-based compensation expense based on
the best estimate of the ultimate value of the shares of common stock to be transferred from the Founder to Kevin
through full vesting of the Variable Right in conjunction with the IPO in November 2007. Stock-based
compensation expense for 2007 included an accrual of $2,960 as the Company’s best estimate of the ultimate
value to be transferred from the Founder to Kevin via settlement or arbitration. In December 2008, the Company
reversed the accrual of stock-based compensation expense related to the Variable Plan, which reduced current
year stock-based compensation expense by $2,960, with an offset to additional capital.
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