Harman Kardon 2008 Annual Report Download - page 82

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64
Restricted Stock Units
During fiscal 2008, no restricted stock units were granted under the 2002 Plan. During fiscal 2007,
25,000 restricted stock units were granted under the 2002 Plan with a zero-value exercise price. At June
30, 2008 the aggregate intrinsic value of restricted stock unit granted was $1.0 million. As of June 30,
2008, there was $0.7 million of total unrecognized compensation cost related to restricted stock unit
compensation arrangements. The weighted average recognition period is 1.26 years. Under the 2002 Plan,
no restricted stock units were granted, vested or exercisable during the fiscal year ended June 30, 2008.
During fiscal 2008, 32,291 cash-settled restricted stock units with a minimum cash settlement value of
$3.9 million were granted outside the 2002 Plan. The cash settlement value of these restricted stock units
was increased to $4.0 million in November 2007 and these restricted stock units were settled on March 1,
2008 for $4.0 million. Also during fiscal 2008, an additional 34,608 cash-settled restricted stock units
were granted outside the 2002 Plan. These restricted stock units are accounted for as a liability award and
are recorded at the fair value at the end of the reporting period in accordance with the vesting schedule
over the three year vesting term.
Chief Executive Officer Special Enterprise Value Bonus
Our Chief Executive Officer was granted a special bonus award in November 2007. The award will be
settled in cash based on a comparison of Harman’s enterprise value at November 2012 to the enterprise
value at the grant date in November 2007. The award is classified as a liability award. As a result, the
fair value is required to be measured each quarter. The fair value of this award at June 30, 2008 was $1.2
million, calculated using a Monte Carlo simulation. Approximately $0.2 million of compensation
expense was recorded in fiscal 2008, based on the value of the award and the proportionate amount of
requisite service that has been rendered to date.
Note 13 - Accelerated Share Repurchase
On October 30, 2007, we used the proceeds from the issuance and sale of the Notes to repurchase and
retire 4,775,549 shares of our common stock for a total purchase price of approximately $400 million
from two financial institutions, under two separate accelerated share repurchase (“ASR”)
agreements. These shares represented approximately seven percent of the then-outstanding shares of our
common stock.
Each ASR was accounted for as a purchase of shares and a separate net-settled forward contract indexed
to our stock. The forward contract was settled based on the difference between the volume weighted
average price of our common stock over the financial institutions’ open market purchase period and the
valuation at the time of the shares purchase. The open market purchase period represents the period of
time over which the financial institutions were permitted to purchase shares in the open market to satisfy
the borrowings of our common stock they made to execute the share purchase transactions. Settlement of
the forward contracts were paid in shares, at our option. As a result, we received an additional 2,449,230
shares upon settlement of the ASR agreements. A total of 7,224,779 shares were purchased and retired as
a result of the ASR agreements.