Stein Mart 2009 Annual Report Download - page 38

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-14
one-half to two and one-half times final base salary. On February 3, 2008, we adopted the guidance of ASC Topic 715-60, Defined Benefit
Plans, Other Postretirement, and recorded a postretirement benefit liability pertaining to these life insurance benefits of $4.5 million through
a reduction to retained earnings. The postretirement benefit liability was $5.3 million and $4.6 million at January 30, 2010 and January 31,
2009, respectively, and is classified in other liabilities. Accumulated other comprehensive income on the consolidated balance sheets at
January 31, 2010 and January 31, 2009 includes $0.8 million related to these benefits. The expense for 2009 and 2008 was immaterial.
In connection with the executive deferral and executive split-dollar life insurance plans, whole life insurance contracts were purchased on
the related participants. At January 30, 2010 and January 31, 2009, the cash surrender value of these policies was $10.5 million and $13.2
million, respectively, and is included in other assets in the Consolidated Balance Sheets.
We have a noncontributory executive retiree medical plan wherein eligible retired executives may continue their pre-retirement medical,
dental and vision benefits through age 65. The postretirement benefit liability was $0.4 million and accumulated other comprehensive
income was $0.2 million at January 31, 2010, respectively. The expense for 2009 was immaterial.
8. Stockholders’ Equity
Stock Repurchase Plan
During 2009, 2008 and 2007, we repurchased 13,154 shares, 4,839 shares and 2,438,854 shares of our common stock in the open market
at a total cost of $123 thousand, $18 thousand and $26.9 million, respectively. As of January 30, 2010, there are 789,991 shares which
can be repurchased pursuant to the Board of Directors’ current authorization.
Share-Based Compensation Plans
We have an Employee Stock Purchase Plan (the “Stock Purchase Plan”) whereby all employees who complete six months employment
and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible to participate in the Stock
Purchase Plan. Participants in the Stock Purchase Plan may purchase shares of the Company’s common stock at 85% of the lower of the
fair market value of the Company’s stock determined at either the beginning or the end of each semi-annual option period. Shares eligible
under the Stock Purchase Plan, which is effective for the years 1997 through 2015, are limited to 2.8 million shares in the aggregate, with
no more than 200,000 shares being made available in each calendar year, excluding carryover from previous years. In 2009, 2008 and
2007, the participants acquired 154,895 shares, 405,232 shares and 190,663 shares of common stock at weighted-average per share
prices of $3.38, $1.97 and $5.91, respectively. The fair value of Employee Stock Purchase Plan shares was estimated using the Black-
Scholes call option value method with the following weighted-average assumptions for 2009: expected volatility of 122.5%, expected
dividend yield of 0%, a risk-free interest rate of 0.3%, a present-value discount factor of 1.0% and an expected term of six months. Share-
based compensation expense for the Stock Purchase Plan was $0.3 million, $0.5 million and $0.6 million in 2009, 2008 and 2007,
respectively.
Our Omnibus Plan provides that shares of common stock may be granted to certain key employees and outside directors through non-
qualified stock options, incentive stock options, stock appreciation rights, performance awards, restricted stock, or any other award made
under the terms of the plan. The Board of Directors, or its delegated authority, determines the exercise price and all other terms of all
grants. In general, one-third of the awards granted become exercisable on each of the third, fourth and fifth anniversary dates of grant and
the awards expire seven years after the date of grant.
The following table presents the number of awards authorized and available for grant under the Omnibus Plan at January 30, 2010 (shares
in thousands):
Shares
Total awards authorized 7,500
Awards available for grant 1,626
Stock Options
The fair value of each stock option granted during 2009, 2008 and 2007 was estimated at the date of grant using the Black-Scholes options
pricing model with the following weighted-average assumptions: expected volatility of 66.1%, 58.7% and 46.2%, respectively, expected
dividend yield of 0%, 0% and 2.1%, respectively, a risk-free interest rate of 2.8%, 1.5% and 4.4%, respectively, and an expected option
term of 6.0 years, 4.1 years and 4.8 years, respectively. The expected volatility is based on the historical volatility of our stock prices over
assumed expected terms. The risk-free interest rate is estimated from yields of U.S. Treasury instruments of varying maturities with terms
consistent with the expected terms of the options. The expected term of an option is calculated from a lattice model using historical
employee exercise data.