Estee Lauder 2003 Annual Report Download - page 77

THEEST{E LAUDER COMPANIES INC. 76
NOTE 13 – COMMON STOCK
As of June 30, 2003, the Company’s authorized common
stock consists of 650 million shares of Class A Common
Stock, par value $.01 per share, and 240 million shares of
Class B Common Stock, par value $.01 per share. Class B
Common Stock is convertible into Class A Common
Stock, in whole or in part, at any time and from time to
time at the option of the holder, on the basis of one share
of Class A Common Stock for each share of Class B Com-
mon Stock converted. Holders of the Company’s Class A
Common Stock are entitled to one vote per share and
holders of the Company’s Class B Common Stock are
entitled to ten votes per share.
Information about the Company’s common stock out-
standing is as follows:
Class A Class B
(Shares in thousands)
Balance at June 30, 2000 124,181.7 113,679.3
Acquisition of treasury stock (0.9) —
Conversion of Class B to Class A 189.0 (189.0)
Stock option programs 806.2 —
Balance at June 30, 2001 125,176.0 113,490.3
Acquisition of treasury stock (1,500.0) —
Conversion of Class B to Class A 5,077.8 (5,077.8)
Stock option programs 436.3 —
Balance at June 30, 2002 129,190.1 108,412.5
Acquisition of treasury stock (11,245.2) —
Conversion of Class B to Class A 950.0 (950.0)
Share grants 4.0 —
Share units converted 0.8 —
Stock option programs 1,094.0 —
Balance at June 30, 2003 119,993.7 107,462.5
On September 18, 1998, the Company’s Board of Direc-
tors authorized a share repurchase program to repurchase
a total of up to 8.0 million shares of Class A Common
Stock in the open market or in privately negotiated trans-
actions, depending on market conditions and other fac-
tors. In October 2002, the Board of Directors authorized
the repurchase of up to 10.0 million additional shares of
Class A Common Stock increasing the total authorization
under the share repurchase program to 18.0 million
shares. As of June 30, 2003, approximately 13.8 million
shares have been purchased under this program.
NOTE 14 – STOCK PROGRAMS
The Company has established the Fiscal 2002 Share
Incentive Plan, the Fiscal 1999 Share Incentive Plan, the
Fiscal 1996 Share Incentive Plan and the Non-Employee
Director Share Incentive Plan (collectively, the “Plans”)
and, additionally, has made available stock options and
share units that were, or will be, granted pursuant to these
Plans and certain employment agreements. These stock-
based compensation programs are described below.
Total net compensation expense attributable to the
granting of share units and the increase in value of exist-
ing share units was $1.4 million and $0.7 million in fiscal
2003 and 2001, respectively. Total net compensation
income attributable to the granting of share units and the
related decrease in value of existing share units was $0.2
million in fiscal 2002.
Share Incentive Plans
The Plans provide for the issuance of 30,750,000 shares
to be awarded in the form of stock options, stock appre-
ciation rights and other stock awards to key employees
and stock options, stock awards and stock units to non-
employee directors of the Company. As of June 30, 2003,
6,457,000 shares of Class A Common Stock were
reserved and were available to be granted pursuant to the
Plans. The exercise period for all stock options generally
may not exceed ten years from the date of grant. Pursuant
to the Plans, stock option awards in respect of 6,651,200,
2,175,300 and 2,709,500 shares were granted in fiscal
2003, 2002 and 2001, respectively, and share units in
respect of 57,800, 50,000 and 43,100 shares were
granted in fiscal 2003, 2002 and 2001, respectively.
During fiscal 2003, approximately 800 share units were
converted into shares of Class A Common Stock. During
fiscal 2002, 40,700 share units were cancelled without the
issuance of any shares, but the value of such units was
transferred to a deferred compensation account. Gener-
ally, the stock option awards become exercisable at
various times through January 2007, while the share units
will be paid out in shares of Class A Common Stock at a
time to be determined by the Company.
In addition to awards made by the Company, certain
outstanding stock options were assumed as part of the
October 1997 acquisition of Sassaby. Of the 221,200
originally issued options to acquire shares of the Com-
pany’s Class A Common Stock, 14,100 were outstanding
as of June 30, 2003, all of which were exercisable and will
expire through May 2007.