Nordstrom 2006 Annual Report Download - page 65

Nordstrom, Inc. and subsidiaries 47
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in thousands except per share and per option amounts
The following table summarizes information about stock options outstanding for the Nordstrom, Inc. Plans as of February 3, 2007:
Options Outstanding
Options Exercisable
Range of Exercise Prices
Shares
Weighted-Average
Remaining Contractual
Life (Years)
Weighted-Average
Exercise Price
Shares
Weighted-Average
Remaining Contractual
Life (Years)
Weighted-Average
Exercise Price
$8.03 - $9.00
2,722
6
$9
1,717
6
$9
$9.01 - $13.00
2,353
4
12
2,316
4
12
$13.01 - $20.00
3,009
5
19
1,576
4
18
$20.01 - $40.27
3,772
9
33
381
8
26
11,856
6
$19
5,990
5
$13
PERFORMANCE SHARE UNITS
We grant performance share units to align certain elements of our senior management compensation with our shareholder returns. Performance share
units vest after a three-year performance period only when our total shareholder return (growth in stock price and reinvestment of dividends) is
positive and outperforms companies in a defined peer group of direct competitors determined by the Compensation Committee of our Board of
Directors. The percentage of units that vest depends on our relative position at the end of the performance period and can range from 0% to 125% of
the number of units granted. As participants may elect to exchange each unit earned for one share of stock or the cash equivalent, these units are
classified as a liability award.
At the end of each period, we record the performance share unit liability based on the vesting factors described above. As of February 3, 2007
and January 28, 2006, our liabilities included $12,653 and $16,927 for the units. For the years ended February 3, 2007, January 28, 2006 and
January 29, 2005, stock-based compensation expense was $7,036, $11,672 and $7,816. As of February 3, 2007, the remaining unrecognized
stock-based compensation expense related to non-vested performance share units was $4,279, which is expected to be recognized over a weighted
average period of 19 months. At January 29, 2006, 412,648 units were unvested. During the year ended February 3, 2007, 68,092 units were granted,
216,865 units vested and 8,408 units cancelled, resulting in an ending balance of 255,467 unvested units as of February 3, 2007.
The following table summarizes the information for performance share units that vested during the period:
Fiscal Year
2006
2005
2004
Number of performance share units vested
216,865
336,892
455,762
Total fair value of performance share units vested
$11,310
$10,159
$27,488
Total amount of performance share units settled for cash
$5,982
$1,836
$4,977
Nonemployee Director Stock Incentive Plan
The Nonemployee Director Stock Incentive Plan authorizes the grant of stock awards to our nonemployee directors. These awards may be deferred or
issued in the form of restricted or unrestricted stock, nonqualified stock options or stock appreciation rights. We issued 4,795 shares of unrestricted
stock for a total expense of $169 in 2006. An additional 14,872 shares were deferred for a total expense of $519. As of February 3, 2007, we had 754,536
remaining shares available for issuance.
Employee Stock Purchase Plan
We offer an Employee Stock Purchase Plan (“ESPP”) as a benefit to our employees. Employees may make payroll deductions of up to ten percent of
their base and bonus compensation. At the end of each six-month offering period, participants may purchase shares of our common stock at 90% of
the fair market value on the last day of each offer period. Beginning in 2006, we recorded compensation expense over the purchase period at the fair
value of the ESPP at the end of each reporting period.
We issued 446 shares under the ESPP during the year ended February 3, 2007. As of February 3, 2007 and January 28, 2006, we had current liabilities
of $5,855 and $5,497 for future purchase of shares under the ESPP.