Estee Lauder 2009 Annual Report Download - page 149

amount which it believes would be necessary to resolve
its share of this matter. If the settlement is not successfully
completed, the Company intends to vigorously defend
the pending claims. While no assurance can be given as
to the ultimate outcome, management believes that the
resolution of the Blydenburgh matters will not have a
material adverse effect on the Company’s consolidated
fi nancial condition.
NOTE 15 — COMMON STOCK
As of June 30, 2009, 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, 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
Acquisition of treasury stock (1,401.2) —
Stock-based compensation 3,188.3 —
Balance at June 30, 2009 118,626.9 78,067.3
The Company is authorized by the Board of Directors to
repurchase up to 88.0 million shares of Class A Common
Stock in the open market or in privately negotiated
transactions, depending on market conditions and other
factors. As of June 30, 2009, the cumulative total of
acquired shares pursuant to the authorization was 65.3
million, reducing the remaining authorized share repur-
chase balance to 22.7 million.
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 fi scal 2008 consolidated balance sheet.
NOTE 16 — STOCK PROGRAMS
As of June 30, 2009, the Company has two active equity
compensation plans which include the Amended and
Restated Fiscal 2002 Share Incentive Plan and the Non-
Employee Director Share Incentive Plan (collectively, the
“Plans”). These Plans currently provide for the issuance of
24,720,200 shares of Class A Common Stock, which con-
sist of shares originally provided for and shares transferred
to the Plans from other inactive plans and employment
agreements, 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, 2009, approxi-
mately 5,353,100 shares of Class A Common Stock were
reserved and available to be granted pursuant to these
Plans. The Company may satisfy the obligation of its stock-
based compensation awards with either new or treasury
shares. The Company’s equity compensation awards
outstanding at June 30, 2009 include stock options,
performance share units (“PSU”), 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 2009, 2008 and 2007 was
$51.5 million ($34.3 million after tax), $47.2 million ($31.2
million after tax) and $43.2 million ($28.3 million after
tax), respectively. As of June 30, 2009, the total unrecog-
nized compensation cost related to nonvested stock-based
awards was $35.4 million and the related weighted-
average period over which it is expected to be recognized
is approximately 1.8 years.
148 THE EST{E LAUDER COMPANIES INC.