Estee Lauder 2008 Annual Report Download - page 105

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NOTE 16
—
COMMON STOCK
As of June 30, 2008, 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
Common 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, 2005 132,663.4 87,640.9
Acquisition of treasury stock (11,216.3) —
Conversion of Class B to Class A 2,335.0 (2,335.0)
Stock-based compensation 2,673.0 —
Balance at June 30, 2006 126,455.1 85,305.9
Acquisition of treasury stock (22,477.6) —
Conversion of Class B to Class A 3,501.1 (3,501.1)
Stock-based compensation 5,044.8 —
Balance at June 30, 2007 112,523.4 81,804.8
Acquisition of treasury stock (3,106.3) —
Conversion of Class B to Class A 3,737.5 (3,737.5)
Stock-based compensation 3,685.2 —
Balance at June 30, 2008 116,839.8 78,067.3
On September 18, 1998, the Company’s Board of
Directors 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 negoti-
ated transactions, depending on market conditions and
other factors. The Board of Directors authorized the
repurchase of up to 10.0 million additional shares of Class
A Common Stock in both October 2002 and May 2004,
and an additional 20.0 million in each of May 2005,
February 2007 and November 2007, increasing the total
authorization under the share repurchase program to 88.0
million shares. As of June 30, 2008, approximately 64.1
million shares have been purchased under this program.
Accelerated Share Repurchase Program
In March 2007, the Company repurchased approximately
15,960,800 shares of its outstanding Class A Common
Stock for $750.0 million through an accelerated share
repurchase program with a fi nancial counterparty. These
shares were accounted for as treasury stock, carried at
cost, and refl ected as a reduction to stockholders’ equity.
In August 2007, the fi nancial counterparty informed the
Company that it had completed its obligations under the
agreement. The per-share price paid by the Company at
inception of the program exceeded the fi nal volume
weighted average price per share, as defi ned by the con-
tract. Accordingly, the Company received 97,417 shares of
its Class A Common Stock from the fi nancial counterparty
as a price adjustment and fi nal settlement, which was
recorded as treasury stock and additional paid-in capital
in the consolidated balance sheet.
NOTE 17
—
STOCK PROGRAMS
As of June 30, 2008, the Company has three active equity
compensation plans which include the Amended and
Restated Fiscal 2002 Share Incentive Plan, the Fiscal 1999
Share Incentive Plan and the Non-Employee Director
Share Incentive Plan (collectively, the “Plans”). These
Plans currently provide for the issuance of 33,194,400
shares, which consist of shares originally provided for and
shares transferred to the Plans from a previous plan and
employment agreement, to be granted in the form of
stock-based awards to key employees, consultants and
non-employee directors of the Company. As of June 30,
2008, approximately 7,184,400 shares of Class A Common
Stock were reserved and available to be granted pursuant
to these Plans, subject to the approval by the Stock Plan
Subcommittee of the Company’s Board of Directors of
expected payouts for performance share units (“PSU”)
vested as of June 30, 2008. The Company may satisfy the
obligation of its stock-based compensation awards with
either new or treasury shares. The Company’s stock
compensation awards outstanding at June 30, 2008
include stock options, PSUs, restricted stock units (“RSU”)
and share units.
Total net stock-based compensation expense is attrib-
utable to the granting of, and the remaining requisite
service periods of, stock options, PSUs, RSUs and share
units. Compensation expense attributable to net stock-
based compensation for fi scal 2008, 2007 and 2006
was $47.2 million ($31.2 million after tax), $43.2 million
($28.3 million after tax) and $35.7 million ($23.4 million
after tax), respectively. As of June 30, 2008, the total
unrecognized compensation cost related to nonvested
stock-based awards was $27.6 million and the related
weighted- average period over which it is expected to be
recognized is approximately 1.6 years.
THE EST{E LAUDER COMPANIES INC. 103