Petsmart 2012 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2012 Petsmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

F-19
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. 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.
For units granted in 2012, the performance goal was defined as a specified cumulative three-year annualized, compound
growth of income before income tax expense and equity income from Banfield for the 2012 through 2014 performance period,
as compared to 2011. The actual number of PSUs awarded to each participant was set at a minimum threshold of 0% of the
participant's target number of PSUs and could increase up to 200% based upon performance results. Actual performance against
the performance goal for units granted in 2012 will be measured at the end of the performance period and approved by the Board
in March 2015.
For units granted in 2011, the performance goal was defined as a specified growth of income before income tax expense and
equity income from Banfield as compared to 2010. 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. Actual performance against the 2011 performance goal was approved by the Board in March
2012, and qualified participants achieved 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 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. Actual performance against the 2010 performance goal was approved by the Board in March 2011, and qualified participants
achieved 150% of their target awards.
Activity for PSUs in 2012, 2011 and 2010 is as follows (in thousands, except per share data):
Year Ended
February 3, 2013 (53 weeks) January 29, 2012 (52 weeks) January 30, 2011 (52 weeks)
Shares
Weighted-Average
Grant Date
Fair Value Shares
Weighted-Average
Grant Date
Fair Value Shares
Weighted-Average
Grant Date
Fair Value
Nonvested at beginning of year ......... 1,337 $ 25.17 1,065 $ 22.14 570 $ 16.97
Granted............................................... 213 $ 58.32 228 $ 40.80 288 $ 31.77
Additional units granted for
performance achievement.................. 109 $ 40.80 139 $ 31.77 262 $ 16.96
Vested................................................. (760) $ 17.97 (5) $ 20.73 — $ —
Forfeited............................................. (64) $ 38.98 (90) $ 24.08 (55) $ 18.89
Nonvested at end of year.................... 835 $ 41.14 1,337 $ 25.17 1,065 $ 22.14
The total fair value of PSUs which vested during 2012 and 2011 was $44.7 million and $0.2 million, respectively.
Management Equity Units
From 2009 to 2011, certain members of management received 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 is determined using our closing stock price on the vest date and is paid out in cash.
As of February 3, 2013, and January 29, 2012, the total liability included in other current liabilities and other non-current
liabilities in the Consolidated Balance Sheets was $16.7 million and $18.4 million, respectively. The 2009 management equity
unit grant vested on March 9, 2012, and $11.9 million was paid in cash in March 2012. The 2010 grant vests on March 29, 2013.
In March 2012, the Board of Directors approved the replacement of MEUs with Restricted Stock Units, or "RSUs." As such,
no additional MEUs were granted in 2012.
PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)