Toro 2009 Annual Report Download - page 61

order for the option to continue to vest following retirement. The The table below presents the non-vested options and perform-
number of unissued shares of common stock available for future ance share awards as of October 31, 2009 and changes during
stock option grants under the company’s stock-based compensa- the fiscal year ended October 31, 2009:
tion plans was 781,907 as of October 31, 2009.
Weighted- Weighted-
The company also has a long-term incentive plan called The
Average Average
Toro Company Performance Share Plan. Under this plan, key Fair Value Fair Value
employees are granted the right to receive shares of common Stock at Date Performance at Date
stock or deferred performance share units, contingent on the Options of Grant Shares of Grant
achievement of performance goals of the company, which are gen- Non-vested as of
erally measured over a three-year period. The number of shares of October 31, 2008 759,470 $12.97 364,000 $47.39
common stock a participant receives will be increased (up to Granted 388,173 7.96 135,800 28.62
Vested/earned (407,956) 12.30 (124,528) 41.44
200 percent of target levels) or reduced (down to zero) based on
Forfeited/cancelled (22,355) 9.16 (13,472) 41.44
the level of achievement of performance goals and vest over a
Non-vested as of
three-year period. Shares issued in connection with this plan are
October 31, 2009 717,332 $10.76 361,800 $42.61
granted in the first quarter of the company’s fiscal year. Compen-
sation expense is recognized for these awards on a straight-line As of October 31, 2009, there was $1,459 of total unrecognized
basis over the vesting period based on the fair value as of the compensation expense related to non-vested stock option compen-
date of grant and the probability of achieving performance goals. sation arrangements granted under the company’s plans. That cost
The number of unissued shares of common stock available for is expected to be recognized over a weighted-average period of
future grants under the company’s Performance Share Plan was 1.4 years. As of October 31, 2009, there was $1,005 of total
465,161 as of October 31, 2009. unrecognized compensation expense related to non-vested per-
A summary of activity under the plans previously described is formance share compensation arrangements granted under the
presented below: company’s plan. That cost is expected to be recognized over a
weighted-average period of 1.6 years.
Performance
The fair value of each share-based option is estimated on the
Aggregate Shares
Options Intrinsic Potentially date of grant using a Black-Scholes valuation method that uses the
Outstanding Price
1
Life
2
Value Issuable assumptions noted in the table below. The expected life is a signif-
Outstanding as of icant assumption as it determines the period for which the risk-free
October 31, 2008 2,813,266 $30.25 3.6 $24,944 364,000 interest rate, volatility, and dividend yield must be applied. The
Granted 388,173 29.23 135,800 expected life is the average length of time over which the
Exercised/earned (914,569) 14.63 (124,528) employee groups are expected to exercise their options, which is
Cancelled/forfeited (55,845) 41.11 (13,472)
based on historical experience with similar grants. Separate groups
Outstanding as of of employees that have similar historical exercise behavior are
October 31, 2009 2,231,025 $36.20 4.7 $11,979 361,800
considered separately for valuation purposes. Expected volatilities
Exercisable as of
are based on the movement of the company’s common stock over
October 31, 2009 1,513,693 $34.29 3.4 $ 9,020 –
the most recent historical period equivalent to the expected life of
1
Weighted-average exercise price
2
Weighted-average contractual life in years the option. The risk-free interest rate for periods within the contrac-
tual life of the option is based on the U.S. Treasury rate over the
Total stock-based compensation expense for these plans was expected life at the time of grant. Dividend yield is estimated over
$4,116, $5,684, and $7,293 for the fiscal years ended October 31, the expected life based on the company’s dividend policy, histori-
2009, 2008, and 2007, respectively. The total intrinsic value of cal dividends paid, expected future cash dividends, and expected
options (the amount by which the stock price exceeded the strike changes in the company’s stock price.
price of the option on the date of exercise) that were exercised
during the fiscal years ended October 31, 2009, 2008, and 2007
was $18,394, $8,398, and $22,781, respectively.
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