Harman Kardon 2011 Annual Report Download - page 98

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compensation expense for share-based compensation was $18.0 million, $21.3 million and $9.8 million for the
years ended June 30, 2011, 2010 and 2009, respectively. The total income tax benefit recognized in our
Consolidated Income Statement for share-based compensation arrangements was $5.2 million, $5.2 million and
$1.2 million for the years ended June 30, 2011, 2010 and 2009, respectively. Share-based compensation was
lower for the year ended June 30, 2011 compared to the prior fiscal year due to income recognized related to
forfeitures in connection with a grant of performance stock options that vested in fiscal year 2011, as well as
fewer stock options outstanding in fiscal year 2011. Share-based compensation expense was higher for fiscal year
2010 compared to the prior fiscal year due to stock option forfeitures recorded in connection with the retirement
of senior executives in fiscal year 2009.
2002 Plan
On December 8, 2010, we amended the 2002 Plan to increase the number of shares available under the 2002
Plan for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units by
1,100,000 to an aggregate amount not to exceed 7,860,000 shares of our common stock. Shares may be issued as
original issuances, treasury shares or a combination of both. We believe that such awards better align the
interests of our employees with those of our stockholders. Option awards are granted with an exercise price equal
to the market price of our stock on the date of the grant. The option awards generally vest over three to five years
of continuous service commencing one year from the date of the grant and expire after ten years. At June 30,
2011, a total of 2,665,812 shares of common stock were available for grant under the 2002 Plan.
Restricted Stock Awards
A grant of restricted stock involves the immediate transfer of ownership of a specified number of shares of
common stock with a “substantial risk of forfeiture” for a period of at least three years. A participant who
receives a restricted stock grant is entitled immediately to voting, dividend and certain other share ownership
rights associated with the underlying shares of common stock. At June 30, 2011, a total of 26,000 shares of
restricted stock were outstanding, of which 20,000 shares were granted under the 2002 Plan and 6,000 shares
were granted outside of the 2002 Plan.
Restricted Stock Units
A grant of restricted stock units involves an agreement by our Company to deliver a specified number of
shares of common stock or cash to the participant when the award vests. A participant has no ownership or
voting rights associated with the underlying shares of common stock. Our Board of Directors may, at its
discretion, authorize the payment of dividend equivalents on the restricted stock units. At June 30, 2011, a total
of 1,670,198 restricted stock units were outstanding, of which 1,666,982 restricted stock units were granted under
the 2002 Plan and 3,216 restricted stock units were granted outside of the 2002 Plan.
Stock Appreciation Rights
Stock appreciation rights allow the holders to receive a predetermined percentage of the spread, not to
exceed 100 percent, between the option price and the fair market value of the shares on the date of exercise. A
performance unit is the equivalent of $100 and is awarded for the achievement of specified management
objectives as a condition to the payment of the award. The performance period will not be less than three years.
No stock appreciation right or performance unit grants have been made under the 2002 Plan.
1992 Incentive Plan
We also have options outstanding under our 1992 Incentive Plan. Shares under the 1992 Incentive Plan can
be issued as original issuances or treasury shares or a combination of both. Options to purchase 87,600 shares
with expiration dates ranging from November 5, 2011 to November 8, 2012 are outstanding under our 1992
Incentive Plan. The 1992 Incentive Plan was approved by our stockholders and had no shares available for grant
on June 30, 2011.
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