CompUSA 2009 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2009 CompUSA annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

43
this plan will have a ten year term from grant date and are immediately exercisable. A maximum of 100,000 shares may be
granted for awards under this plan. The ability to grant new awards under this plan ended on October 12, 2006 but awards
granted prior to such date continue until their expiration. A total of 39,000 options were outstanding under this plan as of
December 31, 2009.
The 1999 Long-term Stock Incentive Plan, as amended (“1999 Plan”) - This plan was adopted on October 25, 1999 with
substantially the same terms and provisions as the 1995 Long-term Stock Incentive Plan. The Company increased the number of
shares that may be granted under this plan to a maximum of 7.5 million from 5.0 million shares. The maximum number of shares
granted per type of award to any individual may not exceed 1,500,000 in any calendar year and 3,000,000 in total. In 2009 the
Company extended until December 31, 2010 the expiration date under this plan after which no grants shall be made under this
plan. The original expiration date was December 31, 2009. Restricted stock grants and common stock awards reduce stock
options otherwise available for future grant. A total of 1,410,984 options and 400,000 restricted stock units were outstanding
under this plan as of December 31, 2009.
The 2006 Stock Incentive Plan For Non-Employee Directors — This plan, adopted by the Company’ s stockholders on
October 11, 2006, replaces the 1995 Stock Option Plan for Non-Employee Directors. The Company adopted the plan so that it
could offer directors of the Company who are not employees of the Company or of any entity in which the Company has more
than a 50% equity interest (“independent directors”) an opportunity to participate in the ownership of the Company by receiving
options to purchase shares of common stock at a price equal to the fair market value at the date of grant of the option and
restricted stock awards. Awards for a maximum of 200,000 shares may be granted under this plan. A total of 20,000 options were
outstanding under this plan as of December 31, 2009.
Shares issued under our share-based compensation plans are usually issued from shares of our common stock held in the treasury.
The fair value of employee share options is recognized in expense over the vesting period of the options, using the graded
attribution method. The fair value of employee share options is determined on the date of grant using the Black-Scholes option
pricing model. The Company has used historical volatility in its estimate of expected volatility. The expected life represents the
period of time (in years) for which the options granted are expected to be outstanding. The risk-free interest rate is based on the
U.S. Treasury yield curve.
Compensation cost related to non-qualified stock options recognized in operating results (selling, general and administrative
expense) for 2009, 2008 and 2007 was $2.2 million, $3.2 million, and $3.4 million respectively. The related future income tax
benefits recognized for 2009, 2008 and 2007 were $0.9 million, $1.2 million and $1.1 million, respectively.
Stock options
The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2009, 2008
and 2007:
2009 2008 2007
Expected annual dividend yield 0% 0% 0%
Risk-free interest rate 2.64% 3.17% 4.93%
Expected volatility 66.9% 63.8% 71.2%
Expected life in years 7.7 6.3 6.2
The following table summarizes information concerning outstanding and exercisable options:
Weighted Average
2009 2008 2007
Shares
Exercise
Price Shares
Exercise
Price Shares
Exercise
Price
Outstanding at beginning of year 2,202,584 $ 9.23 2,655,937 $ 7.95 2,629,076 $ 4.69
Granted 164,000 $ 13.46 110,000 $ 12.90 699,050 $ 19.45
Exercised (221,225) $ 4.89 (503,078) $ 2.25 (545,815) $ 5.19
Cancelled or expired (42,900) $ 16.46 (60,275) $ 17.77 (126,374) $ 15.64
Outstanding at end of year 2,102,459 $ 9.87 2,202,584 $ 9.23 2,655,937 $ 7.95
Options exercisable at year end 1,558,229 1,560,804 1,645,639
Weighted average fair value per option
granted during the year $ 9.53 $ 7.94 $ 13.19
The total intrinsic value of options exercised was $2.0 million, $4.1 million and $6.5 million respectively, for 2009, 2008 and
2007.