Nutrisystem 2010 Annual Report Download - page 64

Additionally, the Company grants restricted stock units. The restricted stock units granted during 2010 were
primarily performance-based units. The performance-based units will be settled in stock upon the Company’s
achievement of specific performance goals over a specified performance period and vest over three years. The
level of achievement of such goals may cause the actual amount of units that ultimately vest to range from 0% to
200% of the original units granted. The Company recognizes expense for performance-based restricted stock
units when it is probable that the performance criteria specified will be achieved. The fair value is equal to the
market price of the Company’s common stock on the date of grant. Expense is amortized ratably over the vesting
period. The following table summarizes the restricted stock unit activity:
Number of
Restricted
Stock Units
Weighted-
Average
Grant-Date
Fair Value
Nonvested, January 1, 2009 ................................................. — $ —
Granted ................................................................ 5,500 $14.84
Vested ................................................................. — $ —
Forfeited ................................................................ — $ —
Nonvested, December 31, 2009 .............................................. 5,500 $14.84
Granted ................................................................ 67,496 $17.53
Performance factor adjustment .............................................. (14,999) $17.53
Vested ................................................................. (1,833) $14.84
Forfeited ................................................................ — $ —
Nonvested, December 31, 2010 .............................................. 56,164 $17.35
The Company recorded compensation expense of $10,329, $8,844 and $6,950 in the accompanying consolidated
statements of operations for 2010, 2009 and 2008, respectively, in connection with the issuance of the restricted
shares and restricted stock units. As of December 31, 2010, there was $19,562 of total unrecognized
compensation expense related to unvested share-based compensation arrangements, which is expected to be
recognized over a weighted-average period of 1.3 years.
Certain of the Company’s share-based payment arrangements were held by non-employee consultants. These
stock options were accounted for as liability awards. The fair value of these awards was estimated using the
Black-Scholes option pricing model and was remeasured at each financial statement date until the award settled
or expired. During 2008, the Company reduced expense by $109 based on the remeasurement of these options.
Stock options to acquire 8,000 shares of common stock were exercised during 2008 resulting in the
reclassification of $103 to equity. As of December 31, 2010 and 2009, no options to non-employee consultants
were outstanding.
14. EMPLOYEE BENEFIT PLAN
The Company maintains a qualified tax deferred defined contribution retirement plan (the “Plan”). Under the
provisions of the Plan, substantially all employees meeting minimum age and service requirements are entitled to
contribute on a before and after-tax basis a certain percentage of their compensation. The Company matched
100% of employees’ first 3% contribution and 50% of the employees’ next 2% contribution. Effective June 1,
2009, the Company elected to suspend its matching contribution. Effective April 1, 2010, the Company reinstated
their matching contribution of 100% of employees’ first 3% contribution and 50% of the employees’ next 2%
contribution. Employees vest immediately in their contributions and the Company’s contribution. The
Company’s contributions in 2010, 2009 and 2008 were $528, $452 and $1,055, respectively.
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