Barnes and Noble 2008 Annual Report Download - page 30

The aggregate intrinsic value in the table above rep-
resents the total pretax intrinsic value (the diff erence
between the Company’s closing stock price on the last
trading day of the related fi scal year and the exercise
price, multiplied by the related in-the-money options)
that would have been received by the option holders had
they exercised their options at the end of the fi scal year.
This amount changes based on the market value of the
Company’s common stock. The amount as of February 3,
2007 has been reduced by $2,643 due to the increase in
price of certain options resulting from the stock option
review discussed below. Total intrinsic value of options
exercised for fi scal 2008, 2007 and 2006 (based on the
diff erence between the Company’s stock price on the
exercise date and the respective exercise price, multi-
plied by the number of options exercised) was $3,997,
$43,649 and $30,029, respectively.
As of January 31, 2009, there was $248 of total unrecog-
nized compensation expense related to unvested stock
options granted under the Company’s share-based
compensation plans. That expense is expected to be
recognized over a weighted average period of 0.2 years.
The following table presents a summary of the
Company’s restricted stock activity:
NUMBER OF
SHARES
(in thousands)
WEIGHTED
AVERAGE GRANT
DATE FAIR VALUE
Balance, January 28, 2006 452 $ 33.60
Granted 479 45.85
Vested (124) 33.52
Forfeited (40) 38.94
Balance, February 3, 2007 767 40.97
Granted 539 40.01
Vested (236) 39.83
Forfeited (44) 40.87
Balance, February 2, 2008 1,026 40.74
Granted 991 28.27
Vested (431) 39.27
Forfeited (135) 31.13
Balance, January 31, 2009 1,451 $ 33.55
Total fair value of shares of restricted stock that vested
during fi scal 2008, 2007 and 2006 was $12,108, $9,108
and $5,666, respectively. As of January 31, 2009, there
was $37,111 of unrecognized stock-based compensation
expense related to nonvested restricted stock awards.
That cost is expected to be recognized over a weighted
average period of 2.8 years.
For fi scal 2008, 2007 and 2006, stock-based com-
pensation expense of $20,549, $17,168 and $17,146,
respectively, is included in selling and administrative
expenses.
Stock Option Review
In July 2006, the Company created a Special Committee
of the Board of Directors, consisting of Patricia Higgins,
to review all of the stock option grants by the Company
and the Company’s wholly-owned subsidiary, Barnes
& Noble.com, during the period from 1996 through
2006 and engaged independent outside counsel and an
independent forensic auditor to assist in this matter. On
April 2, 2007, the Special Committee presented its fi nd-
ings and recommendations to the Company’s Board of
Directors, as reported in the Company’s Form 8-K fi led
April 4, 2007. The Special Committee indicated that the
Committee and its advisors received the Company’s full
cooperation throughout its investigation.
Among other fi ndings, the Special Committee deter-
mined that there were numerous instances of stock
option grants for which there was an improper mea-
surement of compensation expense under Accounting
Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). Although the Special
Committee determined that there were instances of
stock options having been dated using favorable dates
that were selected with the benefi t of hindsight and that
serious mistakes were made, the Special Committee did
not fi nd any intent to defraud or fraudulent misconduct
by any individual or group of individuals. The Special
Committee found that the Company’s dating and pricing
practice for stock options was applied uniformly by
Company personnel to stock options granted and was
not used selectively to benefi t any one group or indi-
vidual within the Company. The Company has evaluated
these fi ndings and agrees with the Special Committee.
The Company has concluded, however, that the charges
are not material to the fi nancial statements in any of
the periods to which such charges relate and therefore
will not restate its historic fi nancial statements. The
Company recorded an adjustment of $411 ($246 after
tax) to increase non-cash compensation expense in the
fourth quarter of fi scal 2006 to correctly present com-
pensation expense for fi scal 2006. In accordance with
Staff Accounting Bulletin (SAB)
2008 Annual Report 29