Invacare 2007 Annual Report Download - page 89

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Shareholders’ Equity Transactions—Continued
Restricted stock awards for 80,320, 115,932 and 21,304 shares were granted in years 2007, 2006 and 2005
without cost to the recipients. The restricted stock awards vest ratably over the four years after the award date. At
December 31, 2007 and 2006, there were 175,294 and 147,085 shares, respectively for restricted stock awards
that were unvested. Unearned restricted stock compensation of $3,904,000 in 2007, $3,512,000 in 2006 and
$1,016,000 in 2005, determined as the market value of the shares at the date of grant, is being amortized on a
straight-line basis over the vesting period. Compensation expense of $1,322,000, $1,075,000 and $881,000 was
recognized in 2007, 2006 and 2005, respectively, related to restricted stock awards granted since 2001.
The 2003 Plan and the 1994 Performance Plan have provisions that allow employees to exchange mature
shares to pay the exercise price and surrender shares for the options to cover the minimum tax withholding
obligation. Under these provisions, the company acquired treasury shares of approximately 14,000 for $298,000
in 2007, 128,000 for $4,314,000 in 2006 and 124,000 for $6,004,000 in 2005.
On December 21, 2005, the Board of Directors of Invacare Corporation, based on the recommendation of
the Compensation, Management Development and Corporate Governance Committee (the “Committee”),
approved the acceleration of the vesting for substantially all of the company’s unvested stock options which were
granted under the 1994 Plan, as amended, and the 2003 Plan, which were then underwater. The Board of
Directors decided to approve the acceleration of the vesting of the company’s stock options primarily to partially
offset the recent reductions in other benefits made by the company and to provide additional incentive to those
critical to the company’s current cost reduction efforts.
The decision, which was effective as of December 21, 2005, accelerated the vesting for a total of 1,368,307
of the company’s common shares; including 646,100 shares underlying options held by the company’s named
executive officers. The stock options accelerated equate to 29% of the company’s total outstanding stock options.
Vesting was not accelerated for the restricted awards granted under the Plans and no other modifications were
made to the awards that were accelerated. The exercise prices of the accelerated options, all of which were
underwater, were unchanged by the acceleration of the vesting schedules.
All of the company’s outstanding unvested options under the Plans, which were accelerated, had exercise
prices ranging from $30.91 to $47.80 which were greater than the company’s stock market price of $30.75 as of the
effective date of the acceleration. As of December 31, 2007, an aggregate of 43,569,375 Common Shares were
reserved for issuance upon the conversion of Class B Common Shares and future rights (as defined below), the
exercise or grant of stock options or other awards under the company’s equity incentive plans and the conversion of
the convertible debentures that were issued as part of the company’s Refinancing completed in February 2007.
The following table summarizes information about stock option activity form the three years ended
December 31, 2007, 2006 and 2005:
2007
Weighted
Average
Exercise
Price 2006
Weighted
Average
Exercise
Price 2005
Weighted
Average
Exercise
Price
Options outstanding at January 1 ............ 4,724,651 $30.68 4,776,162 $31.57 4,638,405 $29.81
Granted ................................ 503,096 23.26 522,152 23.87 614,962 41.59
Exercised .............................. (1,875) 23.32 (231,448) 24.61 (356,676) 23.39
Canceled ............................... (492,907) 29.45 (342,215) 36.83 (120,529) 37.17
Options outstanding at December 31 ......... 4,732,965 $30.02 4,724,651 $30.68 4,776,162 $31.57
Options price range at December 31 ......... $ 16.03 to $ 16.03 to $ 16.03 to
$ 47.80 $ 47.80 $ 47.80
Options exercisable at December 31 ......... 3,895,458 4,216,624 4,745,435
Options available for grant at December 31* . . 1,354,431 1,784,033 454,142
FS-25