Coach 2002 Annual Report Download - page 58
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Table of Contents
COACH, INC.
Notes to Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
The adoption of FIN No. 45 did not require additional disclosures and did not impact the Company’s consolidated financial statements, as
the Company does not issue guarantees related to third party indebtedness or performance.
Coach is a party to employment agreements with certain executives, which provide for compensation and other benefits. The agreements
also provide for severance payments under certain circumstances.
Coach is a party to several pending legal proceedings and claims. Although the outcome of such items cannot be determined with
certainty, Coach’s general counsel and management are of the opinion that the final outcome should not have a material effect on Coach’s
cash flow, results of operations or financial position.
The Company is not party to any off-balance sheet transactions or unconsolidated special purpose entities for any of the periods presented
herein.
8. Stock-Based Compensation
Coach Stock-Based Plans. At the time of the initial public offering, Coach established the 2000 Stock Incentive Plan and the 2000 Non-
Employee Director Stock Plan to award stock options and other forms of equity compensation to certain members of Coach management and
the outside members of its Board of Directors. These plans were approved by Coach’s stockholders during fiscal 2002. The exercise price of
each stock option equals 100% of the market price of Coach’s stock on the date of grant and generally has a maximum term of 10 years.
Options generally vest ratably over three years.
Concurrent with its initial public offering in October 2000, Coach granted 6,382 options to essentially all full-time employees and 30
options to outside members of the Board of Directors at the initial public offering price of $8.
Coach employees, at the initial public offering date, converted 2,408 Sara Lee options into the same number of Coach options while
maintaining the same exercise price.
Under Coach’s stock option plans, an active employee can receive a replacement stock option equal to the number of shares surrendered
upon a stock-for-stock exercise. The exercise price of the replacement option was 100% of the market value at the date of exercise of the
original option and will remain exercisable for the remaining term of the original option. Replacement stock options generally vest six months
from the grant date. Replacement stock options of 1,840, 1,084 and 191 were granted in fiscal 2003, 2002 and 2001, respectively.
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