CompUSA 2014 Annual Report Download - page 63

9. SHAREHOLDERS’ EQUITY
Stock based compensation plans
The Company currently has five equity compensation plans which reserve shares of common stock for issuance to key employees, directors,
consultants and advisors to the Company. The following is a description of these plans:
The 1995 Long-term Stock Incentive Plan - This plan, adopted in 1995, allowed the Company to issue qualified, non-
qualified and deferred
compensation stock options, stock appreciation rights, restricted stock and restricted unit grants, performance unit grants and other stock
based awards authorized by the Compensation Committee of the Board of Directors. Options issued under this plan expire ten years after the
options are granted. The ability to grant new awards under this plan ended on December 31, 2005 but awards granted prior to such date
continue until their expiration. No options were outstanding under this plan as of December 31, 2014.
The 1995 Stock Option Plan for Non-Employee Directors - This plan, adopted in 1995, provides for automatic awards of non-
qualified
options to directors of the Company who are not employees of the Company or its affiliates. All options granted under 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 4,000 options were outstanding under this plan as of December 31, 2014.
The 1999 Long-term Stock Incentive Plan, as amended (“1999 Plan”) -
This plan was adopted in October 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 7,500,000 from 5,000,000 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. The ability to grant new awards under this plan ended on December
31, 2009 but awards granted prior to such date continue until their expiration. A total of 558,500 options were outstanding under this plan
as of December 31, 2014.
The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company’
s stockholders in October, 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 15,000 options were outstanding under this plan as of December 31, 2014.
The 2010 Long-term Stock Incentive Plan (“2010 Plan”) -
This plan was adopted in April, 2010 with substantially the same terms and
provisions as the 1999 Long-
term Stock Incentive Plan. The maximum number of shares granted per type of award to any individual may
not exceed 1,500,000 in any calendar year. Restricted stock grants and common stock awards reduce stock options otherwise available for
future grant. Awards for a maximum of 7,500,000
shares may be granted under this plan. A total of 524,750 options and 255,000 restricted
stock units were outstanding under this plan as of December 31, 2014.
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
2014, 2013 and 2012 was $0.7 million, $1.1 million, and $2.5 million respectively. The related future income tax benefits recognized for
2014, 2013 and 2012 were $0.2 million, $0.4 million and $1.4 million, respectively.
Stock options
The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2014, 2013 and 2012:
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2014
2013
2012
Expected annual dividend yield
0
%
0
%
0
%
Risk
-
free interest rate
2.02
%
1.66
%
1.10
%
Expected volatility
47.1
%
41.1
%
57.3
%
Expected life in years
6.2
7.9
6.3