Supercuts 2008 Annual Report Download - page 106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. BENEFIT PLANS (Continued)
Stock Purchase Plan:
The Company has an employee stock purchase plan (ESPP) available to substantially all employees. Under the terms of the ESPP, eligible
employees may purchase the Company's common stock through payroll deductions. The Company contributes an amount equal to 15.0 percent
of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an
aggregate contribution of $10.0 million. As of June 30, 2008, the Company's cumulative contributions to the ESPP totaled $6.8 million.
Franchise Stock Purchase Plan:
The Company has a franchise stock purchase plan (FSPP) available to substantially all franchisee employees. Under the terms of the plan,
eligible franchisees and their employees may purchase the Company's common stock. The Company contributes an amount equal to five percent
of the purchase price of the stock to be purchased on the open market and pays all expenses of the plan and its administration, not to exceed an
aggregate contribution of $0.7 million. As of June 30, 2008, the Company's cumulative contributions to the FSPP totaled $0.1 million.
Deferred Compensation Contracts:
The Company has agreed to pay the Chief Executive Officer, commencing upon his retirement, an amount equal to 60 percent of his salary,
adjusted for inflation, for the remainder of his life. Additionally, the Company has a survivor benefit plan payable upon his death at a rate of one
half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. In addition, the Company has other
unfunded deferred compensation contracts covering key executives within the Company. The key executives' benefits are based on years of
service and the employee's compensation prior to departure. The Company utilizes a June 30 measurement date for these deferred compensation
contracts, a discount rate based on the Aa Bond index rate (6.50 and 6.25 percent at June 30, 2008 and 2007, respectively) and projected salary
increases of 4.0 percent at June 30, 2008 and 2007 to estimate the obligations associated with these deferred compensation contracts.
Compensation associated with these agreements is charged to expense as services are provided. Associated costs included in general and
administrative expenses on the Consolidated Statement of Operations totaled $2.4, $4.0, and $2.4 million for fiscal years 2008, 2007, and 2006,
respectively. Related obligations totaled $19.9 and $17.9 million at June 30, 2008 and 2007, respectively, and are included in other noncurrent
liabilities in the Consolidated Balance Sheet. (The accumulated benefit obligation totaled $15.2 and $14.4 million at June 30, 2008 and 2007,
respectively.) The tax-effected accumulated other comprehensive gain for the deferred compensation contracts, consisting of primarily
unrecognized actuarial gains, was $0.3 million at June 30, 2008. The Company intends to fund its future obligations under these arrangements
through company-owned life insurance policies on the participants. Cash values of these policies totaled $16.4 and $14.1 million at June 30,
2008 and 2007, respectively, and are included in other assets in the Consolidated Balance Sheet.
The Company also has entered into an Amended and Restated Compensation Agreement (the Restated Agreement) with the Vice Chairman
of the Board of Directors (the Vice Chairman) during fiscal year 2007, that replaces the prior compensation agreement between the Company
and the Vice Chairman. Under the Restated Agreement, the Vice Chairman will continue to provide services to the Company and the Company
has agreed to pay the Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.8 million in fiscal year 2008, for the
remainder of his life (this amount
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