Harris Teeter 2010 Annual Report Download - page 52

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 55,300 shares at a total cost of
$1.5 million, or an average price of $26.97 per share during fiscal 2010 and 250,000 shares at a total cost of
$8.0 million, or an average price of $32.05 per share during fiscal 2008. There were no stock purchases in fiscal
2009.
11. STOCK OPTIONS AND STOCK AWARDS
At October 3, 2010, the Company has 1997, 2000 and 2002 equity incentive plans, which were approved
by the Company’s shareholders and authorized the issuance of 3.9 million 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 October 3, 2010, the Company may grant additional options or stock
awards and performance shares in the amount of 896,000 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.
Stock awards are being expensed ratably over the employees’ five-year requisite service period in accordance
with the graded vesting schedule, resulting in more expense being recognized in the early years. Compensation
expense related to restricted awards totaled $6,104,000, $5,710,000 and $5,339,000 for fiscal years 2010, 2009 and
2008, respectively. The remaining unamortized expense as of October 3, 2010 is $8,199,000, with a weighted
average recognition period of 1.91 years.
Amortization of compensation costs related to stock options ceased at the end of the first quarter of fiscal
2009, since all outstanding options had become fully vested and no options were granted in fiscal 2010 or 2009.
Compensation expense related to stock options totaled $12,000 and $37,000 for fiscal years 2009 and 2008,
respectively.
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
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