Radio Shack 2011 Annual Report Download - page 63

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which are not expected to be significant, will be expensed
as incurred and will include compensation expense such as
retention bonuses for the remaining employees, rent
expense, and professional fees.
NOTE 7 – STOCK-BASED INCENTIVE PLANS
We have implemented several plans to award employees
with stock-based compensation, which are described
below.
Incentive Stock Plans: Under the Incentive Stock Plans
(“ISPs”) described below, the exercise price of options must
be equal to or greater than the fair market value of a share
of our common stock on the date of grant. The
Management Development and Compensation Committee
of our Board of Directors (“MD&C”) specifies the terms for
grants of options under these ISPs; terms of these options
may not exceed ten years. Grants of options generally vest
over three years and grants typically have a term of seven
or ten years. Option agreements issued under the ISPs
generally provide that, in the event of a change in control,
all options become immediately and fully exercisable.
Repricing or exchanging options for lower priced options is
not permitted under the ISPs without shareholder approval.
A brief description of each of our incentive stock plans with
awards still outstanding is included below:
1997 Incentive Stock Plan (“1997 ISP”): The 1997
ISP permitted the grant of up to 11.0 million shares in
the form of incentive stock options (“ISOs”), non-
qualified stock options (options which are not ISOs)
(“NQs”) and restricted stock. The 1997 ISP expired on
February 27, 2007, and no further grants may be made
under this plan. As of December 31, 2011,
approximately 0.8 million stock options were
outstanding under this plan.
1999 Incentive Stock Plan (“1999 ISP”): The 1999
ISP permitted the grant of up to 9.5 million shares in
the form of NQs. Grants of restricted stock,
performance awards and options intended to qualify as
ISO’s under the Internal Revenue Code were not
authorized under this plan. The 1999 ISP also
permitted directors to elect to receive shares in lieu of
cash payments for their annual retainer fees and board
and committee meeting fees. The 1999 ISP expired on
February 23, 2009, and no further grants may be made
under this plan. As of December 31, 2011,
approximately 0.9 million stock options were
outstanding under this plan.
2001 Incentive Stock Plan (“2001 ISP”): The 2001
ISP permitted the grant of up to 9.2 million shares in
the form of ISOs and NQs. The 2001 ISP also
permitted directors to elect to receive shares in lieu of
cash payments for their annual retainer fees and board
and committee meeting fees. The 2001 ISP was
terminated in 2009 upon the shareholder approval of
the 2009 ISP and no further grants may be made
under this plan. As of December 31, 2011,
approximately 1.7 million stock options were
outstanding under this plan.
2009 Incentive Stock Plan (“2009 ISP”): The 2009
ISP permits the grant of up to 11.0 million shares in the
form of ISOs, NQs, restricted stock, restricted stock
units, stock appreciation rights, or other stock-based
awards. The 2009 ISP also permits directors to elect to
receive shares in lieu of cash payments for their annual
retainer fees and board and committee meeting fees.
Full-value awards granted under the 2009 ISP, such as
restricted stock and restricted stock units, will reduce
the number of shares available for grant by 1.68
shares for each share or unit granted. Stock options
and stock appreciation rights will reduce the number of
shares available for grant by one share for each stock
option or stock appreciation right granted. This plan
expires on February 18, 2019. As of December 31,
2011, approximately 1.5 million stock options and 0.3
million shares of unvested restricted stock were
outstanding, and up to 8.6 million shares were
available for grant in the form of stock options under
this plan.
During the third quarter of 2006, we granted 1.7 million
options under the 1997, 1999 and 2001 ISPs to our former
Chief Executive Officer and our former Chief Financial
Officer, who is currently our Chief Executive Officer. These
options vested over four years from the date of grant and
expire in the third quarter of 2013. We also granted 2.5
million non-plan options to our former Chief Executive
Officer as part of an inducement grant related to the terms
of his employment. These options vested over four years
from the date of grant and expire in the third quarter of
2013. An additional market condition was attached to 2.0
million of these non-plan options that restricted exercise
until certain stock price hurdles had been achieved. The
market condition was met in 2007, and all stock price
hurdles have been achieved.
The fair value of the stock options granted during the years
ended December 31, 2011, 2010 and 2009, was estimated
using the Black-Scholes-Merton option-pricing model. The
Black-Scholes-Merton model requires the use of certain
subjective assumptions.