Saks Fifth Avenue 2011 Annual Report Download - page 58

SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table presents additional potentially dilutive common shares excluded from diluted earnings
(loss) per share because the effect of including these potentially dilutive common shares would have been anti-
dilutive:
2011 2010 2009
Stock options and Employee Stock Purchase Plan shares ........... — — 101
Unvested restricted stock awards and performance shares ......... — — 3,944
Total .................................................. — — 4,045
Securities excluded from the computation of diluted EPS because the
exercise prices were greater than the average market price of the
Company’s common stock:
Stock options (1) ........................................ 1,285 1,344 1,659
Written call options (1) ................................... n/a 19,219 19,219
Securities excluded from the computation of diluted EPS per because
the performance criteria were not met:
Performance shares ...................................... 25 50 75
Contingently convertible securities excluded from the computation
of diluted EPS:
7.5% Convertible Notes ................................... — 21,670 21,670
2.0% Convertible Notes ................................... — 19,219 19,219
— 40,889 40,889
(1) Represents the number of options outstanding at the end of each period. Application of the treasury stock method would
reduce this amount if they had a dilutive effect and were included in the computation of diluted EPS.
For the year ended January 28, 2012, there were 40,889 potentially dilutive shares under the Company’s 7.5%
and 2.0% convertible notes that were included in the computation of diluted EPS because inclusion of the
potentially dilutive shares and related interest expense has a dilutive effect.
For the years ended January 29, 2011 and January 30, 2010, there were 40,889 potentially dilutive shares under
the Company’s 7.5% and 2.0% convertible notes that were not included in the computation of diluted EPS
because inclusion of the potentially dilutive shares and related interest expense would be anti-dilutive.
Stock-Based Compensation Plans
The Company maintains an equity incentive plan, which allows for the granting of stock options, stock
appreciation rights, restricted stock, performance share awards and other forms of equity awards to
employees, directors, and officers. Stock options granted generally vest over a four-year period from the grant
date and have contractual terms of seven to ten years from the grant date. Restricted stock and performance
share awards generally vest over periods ranging from three to five years from the grant date, although the
equity incentive plan permits accelerated vesting in certain circumstances at the discretion of the Human
Resources and Compensation Committee (“HRCC”) of the Board of Directors.
The Company recognizes compensation expense for stock option awards with graded vesting on a straight-line
basis over the requisite service period. Compensation expense related to restricted stock and performance
share awards that cliff vest are expensed on a straight-line basis over the requisite service period. Restricted
stock awards with graded-vesting features are treated as multiple awards based upon the vesting date. The
Company records compensation expense for these awards on a straight-line basis over the requisite service
period for each separately vesting portion of the award.
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