Cracker Barrel 2009 Annual Report Download - page 73

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71
dividend yield for periods within the contractual life of
the option.
Year Ended
July 31, 2009 August 1, 2008 August 3, 2007
Dividend yield range 2.59% - 5.35% 1.8% - 2.2% 1.2% - 1.4%
Expected volatility 43% - 61% 31% - 34% 30% - 31%
Risk-free interest rate range 0.5% - 5.4% 2.9% - 5.0% 4.4% - 5.2%
Expected term (in years) 6.7 - 6.9 6.3 1.2 - 6.2
Nonvested Stock
Nonvested stock grants consist of the Company’s common
stock and generally vest over 2-5 years. All nonvested
stock grants are time vested except the nonvested stock
grants of one executive that are based upon the
achievement of strategic goals. If any performance goals
are not met, no compensation cost is ultimately recognized
and, to the extent previously recognized, compensation
cost is reversed. During 2008, based on the Company’s
determination that performance goals would not be
achieved for one executive’s nonvested stock grants, the
Company reversed approximately $3,508 of share-based
compensation expense. During 2009, the Company did not
have any similar reversals.
Generally, the fair value of each nonvested stock grant
is equal to the market price of the Company’s stock at the
date of grant reduced by the present value of expected
dividends to be paid prior to the vesting period, discounted
using an appropriate risk-free interest rate. Certain
nonvested stock grants accrue dividends and their fair value
is equal to the market price of the Company’s stock at the
date of the grant.
A summary of the Company’s nonvested stock activity as
of July 31, 2009, and changes during 2009 is presented in
the following table:
(Shares in thousands)
Weighted-
Average
Grant Date
Nonvested Stock Shares Fair Value
Unvested at August 1, 2008 260 $35.91
Granted 216 17.83
Vested (120) 31.86
Forfeited — —
Unvested at July 31, 2009 356 $26.28
The total fair value of nonvested stock that vested
during 2009, 2008 and 2007 was $3,829, $7,111, and
$1,608, respectively.
As of July 31, 2009, there was $7,912 of total
unrecognized compensation cost related to unvested share-
based compensation arrangements that is expected to
be recognized over a weighted-average period of 1.78 years.
Compensation Cost
Compensation cost for share-based payment arrangements
was $3,680, $4,673 and $6,360, respectively, for stock
options in 2009, 2008 and 2007. Compensation cost for
nonvested and restricted stock was $3,266, $3,818 and
$6,357, respectively, in 2009, 2008 and 2007. Included in
the total for 2007 is share-based compensation expense
from continuing operations of $6,294 and $6,837,
respectively, for stock options and nonvested stock. Share-
based compensation from continuing operations is
recorded in general and administrative expenses. The total
income tax benefit recognized in the Consolidated
Statement of Income for 2009, 2008 and 2007 for share-
based compensation arrangements was $937, $2,564
and $4,406, respectively.
In 2007, the Company modified certain share-based
compensation awards for eleven Logan’s employees. These
employees would have forfeited these unvested awards
upon Logan’s divestiture due to the performance and/or
service conditions of the awards not being met. The
modification of these awards consisted of the cancellation
of the Mid-Term Incentive Retention Plans (“MTIRP”)
and nonvested stock grants for these employees and the
concurrent grant of cash replacement awards for the
cancelled awards. No replacement awards for these
employees’ stock options were given and thus, the unvested
stock options were forfeited upon the completion of the
Logan’s divestiture. The previously accrued compensation
cost for these awards was reversed and no compensation
cost was recorded for these awards. Total compensation
cost reversed related to these awards was approximately
$101 for stock options and $559 for nonvested stock
awards and is recorded as discontinued operations in the
Consolidated Financial Statements. The cash replacement
awards for the 2005 and 2006 MTIRP awards retained their
original vesting terms. The cash replacement awards of
the nonvested stock grants retained their original vesting
terms and vest on various dates between August 2007 and
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