Avnet 2008 Annual Report Download - page 72

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company’s absolute economic profit, as defined, over the prior three-year period and the increase in the Company’s
economic profit relative to the increase in the economic profit of a peer group of companies. During fiscal 2008,
2007 and 2006, the Company granted 170,630, 238,795 and 194,530 performance shares, respectively, to be awarded
to participants in the Performance Share program, of which 30,805 have been forfeited. The actual amount of
Performance Shares issued at the end of the three year period is determined based upon the level of achievement of
the defined performance goals and can range from 0% to 200% of the initial award. The Company anticipates issuing
328,881 shares in the first quarter of fiscal 2009 based upon the goals achieved at the end of the 2006 Performance
Share plan three-year period which ended June 28, 2008. During fiscal 2008, 2007 and 2006, the Company
recognized pre-tax compensation expense associated with the Performance Shares of $6,380,000, $7,025,000 and
$2,559,000.
Outside director stock bonus plan
Non-employee directors are awarded shares equal to a fixed dollar amount of Avnet common stock upon their
re-election each year, as part of their director compensation package. Directors may elect to receive this
compensation in the form of common stock under the Outside Director Stock Bonus Plan or they may elect to defer
their compensation to be paid in common stock at a later date. During fiscal 2008, 2007 and 2006, pre-tax
compensation cost associated with the outside director stock bonus plan was $780,000, $638,000 and $475,000,
respectively.
Employee stock purchase plan
The Company has an Employee Stock Purchase Plan (“ESPP”) under the terms of which eligible employees of
the Company are offered options to purchase shares of Avnet common stock at a price equal to 95% of the fair
market value on the last day of each monthly offering period. Based on the terms of the ESPP, Avnet is not required
to record expense in the consolidated statements of operations related to the ESPP. During the first half of fiscal
2006, the ESPP terms offered a price equal to 85% of the fair market value; as a result, the Company recorded
compensation expense associated with the ESPP, however, such amounts were not material.
The Company has a policy of repurchasing shares on the open market to satisfy shares purchased under the
ESPP, and expects future repurchases during fiscal 2009 to be similar to the number of shares repurchased during
fiscal 2008, based on current estimates of participation in the program. During fiscal 2008, 2007 and 2006, there
were 70,553, 96,013 and 175,454 shares, respectively, of common stock issued under the ESPP program.
From time to time, the Company may become liable with respect to pending and threatened litigation, taxes and
environmental and other matters. The Company has been designated a potentially responsible party or has become
aware of other potential claims against it in connection with environmental clean-ups at several sites. Based upon the
information known to date, the Company believes that it has appropriately reserved for its share of the costs of the
clean-ups and it is not anticipated that any contingent matters will have a material adverse impact on the Company’s
financial condition, liquidity or results of operations.
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13.
Contingent liabilities