Harman Kardon 2011 Annual Report Download - page 101

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For the years ended June 30, 2011, 2010 and 2009, we also granted 329,316, 388,856 and 369,677 restricted
stock units, respectively, under the 2002 Plan that vest three years from the date of grant.
In January and September 2008, we granted 34,608 and 28,344 cash-settled restricted stock units,
respectively, outside the 2002 Plan. These restricted stock units are accounted for as liability awards and are
recorded at the fair value at the end of the reporting period in accordance with their vesting schedules. During the
fiscal years ended June 30, 2011, 2010 and 2009, 9,647, 19,213 and 28,106, respectively, of these restricted stock
units were settled at a cost of $0.3 million, $0.8 million and $0.5 million, respectively.
A summary of equity classified restricted stock unit activity as of and for the fiscal year ended June 30,
2011 is presented below:
Restricted
Stock Units
Non-vested at June 30, 2010 ................................. 1,130,223
Granted ............................................. 712,752
Vested .............................................. (58,268)
Forfeited ............................................ (117,725)
Non-vested at June 30, 2011 ................................. 1,666,982
At June 30, 2011 the aggregate intrinsic value of equity classified restricted stock units was $76.0 million. As
of June 30, 2011, there was $21.5 million of total unrecognized compensation cost related to equity classified
restricted stock unit compensation arrangements. The weighted average recognition period was 1.4 years.
Chief Executive Officer Special Enterprise Value Bonus
Our Chief Executive Officer (“CEO”) was granted a special bonus award in November 2007 (the “Special
Bonus Award”). The award was to 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. This award was originally classified
as a liability in our Consolidated Balance Sheet. The fair value of the Special Bonus Award was required to be
measured each quarter using a Monte Carlo simulation model.
On September 1, 2009, pursuant to the terms of an amendment to the CEO’s employment letter agreement,
the Special Bonus Award was cancelled and replaced with the right to an annual equity award for fiscal years
2011 through 2013 (the “Annual Equity Grant”). On September 1, 2009, both time-based vesting and
performance-based vesting restricted stock units were granted to the CEO pursuant to the terms of the Annual
Equity Grant. The replacement of the Special Bonus Award with the awards granted pursuant to the Annual
Equity Grant was accounted for as a modification of an existing award. As a result of this modification, during
the first quarter of fiscal year 2010, approximately $0.5 million was reclassified from a liability to Additional
paid-in capital in our Consolidated Balance Sheet and $0.5 million was recognized as compensation expense
within SG&A in our Consolidated Statement of Operations in the same reporting period and is therefore included
in our results for the fiscal year ended June 30, 2010.
Note 15 – Restructuring
We announced a restructuring program in June 2006 designed to increase efficiency in our manufacturing,
engineering and administrative organizations and expanded these activities from that time through June 2011 to
improve our global footprint, cost structure, technology portfolio, human resources and internal processes.
In fiscal year 2009, programs initiated included the closure of the Woodbury, New York facility and
numerous headcount reductions across our business units to reduce excess capacity due to decreased sales. The
most significant of these programs was in Germany, Austria, the United Kingdom, Sweden and various locations
in the United States. We additionally completed the transition of our Corporate Headquarters from Washington,
D.C. to Stamford, Connecticut. In fiscal year 2010, we announced the relocation of certain manufacturing
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