Avnet 2009 Annual Report Download - page 70

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Directors for each three-year period. These performance goals are based upon a three-year cumulative increase in the
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 2009,
2008 and 2007, the Company granted 246,650, 170,630 and 238,795 performance shares, respectively, to be awarded
to participants in the Performance Share program, of which 38,740 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
113,130 shares in the first quarter of fiscal 2010 based upon the goals achieved at the end of the 2007 Performance
Share plan three-year period which ended June 27, 2009. During fiscal 2009, the Company recorded a pre-tax net
credit of $1,819,000 in “selling, general and administrative expenses” associated with the Performance Share plans
based upon actual performance under the 2007 plan and based upon the probability assessment of the remaining
plans. During fiscal 2008 and 2007, the Company recognized pre-tax compensation expense associated with the
Performance Shares of $6,380,000 and $7,025,000, respectively.
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 2009, 2008 and 2007, pre-tax
compensation cost associated with the outside director stock bonus plan was $960,000, $780,000 and $638,000,
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.
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 2010 to be similar to the number of shares repurchased during
fiscal 2009, based on current estimates of participation in the program. During fiscal 2009, 2008 and 2007, there
were 100,206, 70,553 and 96,013 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, tax,
environmental and other matters. Management does not anticipate that any contingent matters will have a material
adverse impact on the Company’s financial condition, liquidity or results of operations.
Basic earnings per share is computed based on the weighted average number of common shares outstanding and
excludes any potential dilution. Diluted earnings per share reflect potential dilution from the exercise or conversion
of securities into common stock.
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13.
Contingent liabilities
14.
Earnings per share