Sally Beauty Supply 2011 Annual Report Download - page 118

Sally Beauty Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Fiscal Years ended September 30, 2011, 2010 and 2009
8. Share-Based Payments
In January 2010, the Company adopted the Sally Beauty Holdings, Inc. 2010 Omnibus Incentive Plan (the
‘‘2010 Plan’’), a stockholder-approved share-based compensation plan which allows for the issuance of up
to 29.8 million shares of the Company’s common stock. During the fiscal years 2011, 2010 and 2009, the
Company granted to its employees and consultants approximately 3.0 million, 2.9 million and 2.7 million
stock options and approximately 199,000, 118,000 and 123,000 restricted share awards, respectively, under
either the 2010 Plan or a predecessor share-based compensation plan, the Sally Beauty Holdings, Inc. 2007
Omnibus Incentive Plan (the ‘‘2007 Plan’’). Additionally, during the fiscal years 2011, 2010 and 2009, the
Company granted 43,015, 66,038 and 93,500 restricted stock units (‘‘RSUs’’), respectively, to its
non-employee directors under either the 2010 Plan or the 2007 Plan. After the adoption of the 2010 Plan,
the Company’s equity awards have been made under the 2010 Plan and all future awards are currently
expected to be made under such plan.
The Company measures the cost of services received from employees, directors and consultants in
exchange for an award of equity instruments based on the fair value of the award on the date of grant, and
recognizes compensation expense on a straight-line basis over the vesting period or up to the date a
participant becomes eligible for retirement, if earlier. For the fiscal years 2011, 2010 and 2009, total
compensation cost charged against income and included in selling, general and administrative expenses in
the Company’s consolidated statements of earnings for all share-based compensation arrangements was
$15.6 million, $12.8 million and $8.6 million, respectively, and resulted in an increase in additional paid-in
capital by the same amounts. These amounts included, for the fiscal years 2011, 2010 and 2009,
$5.0 million, $2.5 million and $2.0 million, respectively, of accelerated expense related to certain
retirement eligible employees who continue vesting awards upon retirement, under the provisions of the
2010 Plan and certain predecessor share-based plans such as the 2007 Plan. For fiscal years 2011, 2010 and
2009, the total income tax benefit recognized in our consolidated statements of earnings from these plans
was $6.0 million, $5.0 million and $3.0 million, respectively.
Prior to the Separation Transactions, we were a wholly-owned subsidiary of Alberto-Culver and had no
share-based compensation plans of our own; however, certain of our employees had been granted stock
options and restricted stock awards under share-based compensation plans of Alberto-Culver. Upon
completion of the Separation Transactions, all outstanding Alberto-Culver stock options held by our
employees became options to purchase shares of our common stock.
Stock Options
Each option entitles the holder to acquire one share of the Company’s common stock, has an exercise price
that equals 100% of the market price per share of the Company’s common stock on the date of grant and
generally has a maximum term of 10 years. Options generally vest ratably over a four year period and are
generally subject to forfeiture until the vesting period is complete, subject to certain retirement provisions
contained in the 2010 Plan and certain predecessor share-based compensation plans such as the 2007 Plan.
F-18