Petsmart 2011 Annual Report Download - page 74

PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
The total fair value of restricted stock which vested during 2011, 2010 and 2009 was $22.7 million,
$17.2 million, and $11.0 million, respectively.
Performance Share Units
The 2009 Performance Share Unit Program, approved by the Board of Directors in January 2009, provides
for the issuance of Performance Share Units, or “PSUs,” under our equity incentive plans, to executive officers
and certain other members of our management team based upon an established performance goal. For units
granted in 2011, the performance goal was defined as a specified growth of income before income tax expense
and equity in income from Banfield as compared to 2010. The actual number of PSUs awarded to each partic-
ipant was set at a minimum threshold of 50% of the participant’s target number of PSUs, regardless of perform-
ance results, and could increase up to 150% based upon performance results. Actual performance against the
2011 performance goal was approved by the Board in March 2012, and qualified participants received 150% of
their target awards. For units granted in 2010, the performance goal was defined as a specified end-of-year
income before income tax expense and equity in income from Banfield. The actual number of PSUs awarded to
each participant was set at a minimum threshold of 50% of the participant’s target number of PSUs, regardless of
performance results, and could increase up to 150% based upon performance results. Our actual performance
against the 2010 performance goal was approved by the Board in March 2011, and qualified participants received
150% of their target awards. For units granted in 2009, the performance goal was defined as a specified
end-of-year cash, cash equivalents and restricted cash balance. The actual number of PSUs awarded to each par-
ticipant was set at a minimum threshold of 50% of the participant’s target number of PSUs, regardless of
performance results, and could increase up to 150% based upon performance results. Our actual performance
against the 2009 performance goal was approved by the Board in March 2010, and qualified participants received
150% of their target awards. The PSUs are subject to time-based vesting, cliff vesting on the third anniversary of
the initial grant date, and settle in shares at that time.
Activity for PSUs in 2011, 2010 and 2009 was as follows (in thousands):
Year Ended
January 29, 2012 January 30, 2011 January 31, 2010
Units
Weighted-Average
Grant Date
Fair Value Units
Weighted-Average
Grant Date
Fair Value Units
Weighted-Average
Grant Date
Fair Value
Nonvested at beginning of year . . . 1,065 $22.14 570 $16.97 — $ —
Granted ..................... 228 $40.80 288 $31.77 592 $16.96
Additional units granted for
performance achievement ..... 139 $31.77 262 $16.96 — $ —
Vested ...................... (5) $20.73 — $ — — $ —
Forfeited .................... (90) $24.08 (55) $18.89 (22) $16.69
Nonvested at end of year ........ 1,337 $25.17 1,065 $22.14 570 $16.97
The total fair value of PSUs which vested during 2011 was $0.2 million.
Management Equity Units
Beginning in 2009, certain members of management receive Management Equity Units, or “MEUs.” The
value of one MEU is equal to the value of one share of our common stock and cliff vests on the third anniversary
of the grant date. The payout value of the vested MEU grants will be determined using our closing stock price on
the vest date and will be paid out in cash.
As of January 29, 2011, the total liability for the 2009, 2010, and 2011 MEU grants was $18.4 million and
was included in other current liabilities and other non-current liabilities in the Consolidated Balance Sheet. The
2009 grant vested on March 9, 2012, and approximately $11.9 million was paid in cash in March 2012.
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