Red Lobster 2004 Annual Report Download - page 51

Notes฀to฀
Consolidated Financial Statements
STOCK฀PLANS
15We maintain three active stock option and
stock grant plans under which new awards
may still be issued: the Stock Option and
Long-Term Incentive Plan of 1995 (1995
Plan); the 2002 Stock Incentive Plan (2002 Plan); and the Stock
Plan for Directors (Director Stock Plan). We also have two other
stock option and stock grant plans under which we no longer can
make new awards, although awards outstanding under the plans
may still vest and be exercised in accordance with their terms: the
Restaurant Management and Employee Stock Plan of 2000 (2000
Plan); and the Stock Option and Long-Term Incentive Conversion
Plan (Conversion Plan). All of the plans are administered by the
Compensation Committee of the Board of Directors. The 1995 Plan
provides for the issuance of up to 33,300,000 common shares in con-
nection with the granting of non-qualified stock options, restricted
stock, or restricted stock units (RSUs) to key employees. Up to
2,250,000 shares may be granted under the plan as restricted stock
and RSUs. No new awards may be made under the 1995 Plan after
September 30, 2004. The 2002 Plan provides for the issuance of up
to 8,550,000 common shares in connection with the granting of non-
qualified stock options, incentive stock options, stock appreciation
rights, stock awards, restricted stock, or RSUs to key employees and
non-employee directors. Up to 1,700,000 shares may be granted
under the plan as restricted stock and RSUs. The Director Stock Plan
provides for the issuance of up to 375,000 common shares out of
our treasury in connection with the granting of non-qualified stock
options and restricted stock and RSUs to non-employee directors.
The 2000 Plan provided for the issuance of up to 5,400,000 shares
of common stock out of our treasury as non-qualified stock options,
restricted stock, or RSUs. The Conversion Plan provided for the issu-
ance of stock options and other awards to our officers and employees
in connection with our spin-off from our former parent, General Mills,
Inc., in 1995. As noted above, no new awards may be made under
the 2000 Plan and Conversion Plan, although awards outstanding
under those plans may still vest and be exercised in accordance with
their terms. Under all of the plans, stock options are granted at a price
equal to the fair value of the shares at the date of grant, for terms not
exceeding ten years, and have various vesting periods at the discretion
of the Compensation Committee. Outstanding options generally vest
over one to four years. Restricted stock and RSUs granted under the
1995, 2000, and 2002 Plans generally vest over periods ranging from
three to five years and no sooner than one year from the date of grant.
The restricted period for certain grants may be accelerated based on
performance goals established by the Compensation Committee.
We also maintain the Compensation Plan for Non-Employee
Directors. This plan provides that non-employee directors may
elect to receive their annual retainer and meeting fees in any
combination of cash, deferred cash, or our common shares, and
authorizes the issuance of up to 105,981 common shares out of our
treasury for this purpose. The common shares issuable under the
plan have an aggregate fair value equal to the value of the foregone
retainer and meeting fees.
The per share weighted-average fair value of stock options
granted during fiscal 2004, 2003, and 2002 was $6.83, $9.01, and
$6.05, respectively.
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Financial Review 2004