Harris Teeter 2009 Annual Report Download - page 51

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RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
CAPITAL STOCK
The capital stock of the Company authorized at September 28, 2008 was 75,000,000 shares of no par value
Common Stock, 4,000,000 shares of Preference Stock (non-cumulative voting $0.56 convertible, $10 liquidation
value), and 1,000,000 shares of Additional Preferred Stock. No shares of Preference Stock or Additional Preferred
Stock were issued or outstanding at September 27, 2009 or September 28, 2008.
One preferred share purchase right is attached to each outstanding share of common stock, which rights
expire on November 16, 2010. Each right entitles the holder to purchase one one-hundredth of a share of a new
Series A Junior Participating Additional Preferred Stock for $60. The rights will become exercisable only under
certain circumstances related to a person or group acquiring or offering to acquire a substantial portion of the
Company’s common stock. If certain additional events then occur, each right would entitle the rightholder to
acquire common stock of the Company, or in some cases of an acquiring entity, having a value equal to twice
the exercise price. Under certain circumstances the Board of Directors may extinguish the rights by exchanging
one share of common stock or an equivalent security for each qualifying right or may redeem each right at a
price of $0.01. There are 600,000 shares of Series A Junior Participating Additional Preferred Stock reserved for
issuance upon exercise of the rights.
The Board of Directors adopted a stock buyback program in 1996, authorizing, at management’s discretion,
the Company to purchase and retire up to 10% of the then outstanding shares of the Company’s common stock
for the purpose of preventing dilution as a result of the operation of the Company’s comprehensive stock option
and awards plans. Pursuant to this plan, the Company purchased and retired 250,000 shares at a total cost of
$8,000,000, or an average price of $32.05 per share during fiscal 2008. There were no stock purchases in fiscal
years 2009 or 2007.
STOCK OPTIONS AND STOCK AWARDS
At September 27, 2009, the Company has 1993, 1995, 1997, 2000 and 2002 equity incentive plans, which
were approved by the Company’s shareholders and authorized the issuance of 5,500,000 shares of common stock
pursuant thereto. Under certain stock option plans, the Company has granted incentive stock options to employees
or nonqualified stock options to employees and outside directors. The Company’s incentive stock options generally
become exercisable in installments of 20% per year at each of the first through fifth anniversaries from grant
date and expire seven years from grant date and nonqualified stock options expire ten years from grant date.
Historically and pursuant to the terms of certain plans, the Company grants a single, one-time nonqualified stock
option of 10,000 shares, generally vested immediately, to each of its outside directors at the time of their initial
election to the Board. Under each of the stock option plans, the exercise price of each stock option shall be no less
than the market price of the Company’s stock on the date of grant, and an option’s maximum term is ten years.
At the discretion of the Company, under certain plans a stock appreciation right may be granted and exercised in
lieu of the exercise of the related option (which is then forfeited). Certain of the plans also allow the Company to
grant stock awards such as restricted stock. Under the plans, as of September 27, 2009, the Company may grant
additional options or stock awards and performance shares in the amount of 1,103,000 shares.
The Board of Directors began approving equity awards in lieu of stock options in November 2004. These
awards have historically been apportioned 50% as a fixed award of restricted stock (restricted from sale or
transfer until vesting ratably over a five-year period of continued employment) and 50% as performance share
awards, based on the attainment of certain performance targets for the ensuing fiscal year. If the fiscal year
performance targets are met, the performance shares are subsequently issued as restricted stock and vest over
four years of continued employment.