Albertsons 2013 Annual Report Download - page 79

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Stock options are granted to key salaried employees and to the Company’s non-employee directors to purchase
common stock at an exercise price not less than 100 percent of the fair market value of the Company’s common
stock on the date of grant. Prior to fiscal 2013 stock options vested over four years and starting in fiscal 2013
stock options vest in three years. Restricted stock awards are also awarded to key salaried employees. The
vesting of restricted stock awards granted is determined at the discretion of the Board of Directors or the
Compensation Committee. The restrictions on the restricted stock awards generally lapse between one and five
years from the date of grant and the expense is recognized over the lapsing period. Performance awards as part of
the long-term incentive program are granted to key salaried employees.
As of February 23, 2013, there were 20 reserved shares under the 2012 Stock Plan available for stock-based
awards. Common stock is delivered out of treasury stock upon the exercise of stock-based awards. The
provisions of future stock-based awards may change at the discretion of the Board of Directors or the
Compensation Committee.
Long-Term Incentive Plans
In May 2012, the Company granted 5 performance award units to certain employees under the SUPERVALU
INC. 2007 Stock Plan as part of the Company’s long-term incentive program (“2013 LTIP”). Payout of the award
will be based on the increase in share price over the three-year service period ending May 1, 2015, and will be
settled in the Company’s stock.
The grant date fair value used to determine compensation expense associated with the performance grant was
calculated utilizing a Monte Carlo simulation. The assumptions related to the valuation of the Company’s 2013
LTIP consisted of the following:
2013
Dividend yield 4.1%
Volatility rate 45.8%
Risk-free interest rate 0.4%
Expected life 3.0 years
The grant date fair value of the 2013 LTIP award was $1.38 per award unit. At the end of the three-year service
period, the award units will be converted to shares based on the aggregate award value as determined by
multiplying the award units by the increase in the Company share price over the service period above the $5.77
grant date share price. The aggregate award will be divided by the closing market price as of May 1, 2015, to
determine the number of shares awarded.
In April 2011, the Company granted performance awards to employees under the SUPERVALU INC. 2007
Stock Plan as part of the Company’s LTIP. Payout of the award, if at all, will be based on the highest payout
under the terms of the grant based on the increase in market capitalization over the service period, or the
achievement of financial goals for the three-year period ending February 22, 2014. Awards will be settled equally
in cash and the Company’s stock.
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