Lumber Liquidators 2010 Annual Report Download - page 57

Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements—(Continued)
(amounts in thousands, except share data and per share amounts)
exercisable. In accordance with the terms of the Variable Plan, the Company calculated that 853,853 shares of common stock
had vested (the “Vested Shares”) and were exercisable under the Variable Right. The brother filed a demand for arbitration
on December 7, 2007 related to the Vested Shares, and 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 Company’s founder to his brother via
settlement or arbitration. The Variable Right was exercised on February 1, 2008. In December 2008, an arbitrator determined
that the brother was entitled only to the Vested Shares, and the Company reversed the accrual of stock-based compensation
expense related to the Variable Plan, which reduced 2008 stock-based compensation expense by $2,960, with an offset to
additional capital.
The Regional Manager Plan
The Company maintains a stock unit plan for regional store management, the 2006 Stock Unit Plan for Regional
Managers (the “2006 Regional Plan”). In 2006, certain Regional Managers were granted a total of 85,000 stock units vesting
over approximately a five year period with the Company’s founder contributing the 85,000 shares of common stock
necessary to provide for the exercise of the stock units. No additional grants of stock units are available under the 2006
Regional Plan. Through December 2010, all 85,000 stock units had vested and the Company’s founder had transferred the
corresponding shares of common stock. Pursuant to the provisions of the 2006 Regional Plan, the Company withheld 20,134
shares of common stock from the Regional Managers at the fair market value on the vest dates for a total of $354, to cover
applicable federal and state withholding taxes.
Stock Options
The following table summarizes activity related to stock options:
Shares
Weighted Average
Exercise Price
Remaining Average
Contractual
Term (Years)
Aggregate
Intrinsic
Value
Balance at December 31, 2007 .......................... 1,966,847 $ 7.95 8.8 $ 2,038
Granted ......................................... 288,760 10.47
Exercised ....................................... (26,500) 7.67
Forfeited ........................................ (3,000) 16.55
Balance, December 31, 2008 ............................ 2,226,107 $ 8.27 8.0 $ 5,199
Granted ......................................... 317,141 11.17
Exercised ....................................... (393,199) 8.35
Forfeited ........................................ (103,073) 10.22
Balance, December 31, 2009 ............................ 2,046,976 $ 8.61 7.2 $37,237
Granted ......................................... 289,026 24.35
Exercised ....................................... (206,821) 8.68
Forfeited ........................................ (59,664) 13.24
Balance, December 31, 2010 ............................ 2,069,517 $10.67 6.6 $29,635
Exercisable at December 31, 2010 ........................ 1,471,095 $ 8.03 5.8 $24,839
The aggregate intrinsic value is the difference between the exercise price and the closing price of the Company’s
common stock on December 31. The intrinsic value of the stock options exercised during 2010 and 2009 was $3,742 and
$4,380, respectively.
As of December 31, 2010, total unrecognized compensation cost related to unvested options was approximately $3,377,
net of estimated forfeitures, which is expected to be recognized over a weighted average period of approximately 2.2 years.
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