Chili's 2001 Annual Report Download - page 55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(c) On The Border 1989 Stock Option Plan
In accordance with the Stock Option Plan for On The Border employees, options to purchase 550,000
shares of On The Border’s preacquisition common stock were authorized for grant. Effective May 18,
1994, the 376,000 unexercised On The Border stock options became exercisable immediately in accordance
with the provisions of the Stock Option Plan, and were converted to approximately 186,000 Company stock
options and expire 10 years from the date of original grant. At June 27, 2001, there were approximately
38,000 options exercisable and outstanding at exercise prices ranging from $11.66 to $13.18 with a weighted
average remaining contractual life of 2.17 years.
9. SHAREHOLDERS’ EQUITY
(a) Stockholder Protection Rights Plan
The Company maintains a Stockholder Protection Rights Plan (the ‘‘Plan’’). Upon implementation of
the Plan, the Company declared a dividend of one right on each outstanding share of common stock. The
rights are evidenced by the common stock certificates, automatically trade with the common stock, and are
not exercisable until it is announced that a person or group has become an Acquiring Person, as defined in
the Plan. Thereafter, separate rights certificates will be distributed and each right (other than rights
beneficially owned by any Acquiring Person) will entitle, among other things, its holder to purchase, for an
exercise price of $40, a number of shares of Company common stock having a market value of twice the
exercise price. The rights may be redeemed by the Board of Directors for $0.01 per right prior to the date
of the announcement that a person or group has become an Acquiring Person.
(b) Preferred Stock
The Company’s Board of Directors is authorized to provide for the issuance of 1,000,000 preferred
shares with a par value of $1.00 per share, in one or more series, and to fix the voting rights, liquidation
preferences, dividend rates, conversion rights, redemption rights, and terms, including sinking fund
provisions, and certain other rights and preferences. As of June 27, 2001, no preferred shares were issued.
(c) Treasury Stock
During fiscal 1998, the Company’s Board of Directors approved a plan to repurchase up to
$50.0 million of the Company’s common stock. During fiscal 1999 and fiscal 2000, the Board of Directors
authorized increases in the plan by an additional $35.0 million and $125.0 million, respectively. Currently,
approximately 10,979,000 shares have been repurchased for approximately $191.5 million. The
repurchased common stock was or will be used by the Company to increase shareholder value, offset the
dilutive effect of stock option exercises, satisfy obligations under its savings plans, and for other corporate
purposes. The repurchased common stock is reflected as a reduction of shareholders’ equity.
(d) Restricted Stock
Pursuant to shareholder approval in November 1999, the Company implemented the Executive
Long-Term Incentive Plan for certain key employees, one component of which is the award of restricted
common stock. During fiscal 2001 and 2000, respectively, approximately 57,000 and 337,000 shares of
restricted common stock were awarded, the majority of which vests over a three-year period. Of these
awards, approximately 80,000 shares vested and 46,000 shares were forfeited in fiscal 2001, and
approximately 9,000 shares were forfeited in fiscal 2000. Unearned compensation was recorded as a
separate component of shareholders’ equity at the date of the award based on the market value of the
shares and is being amortized to compensation expense over the vesting period.
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