Napa Auto Parts 2009 Annual Report Download - page 49

Table of Contents


 
The Company maintains various long-term incentive plans, which provide for the granting of stock options, stock appreciation
rights (SARs), restricted stock, restricted stock units (RSUs), performance awards, dividend equivalents and other share-based awards.
SARs represent a right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair
market value of the Company’s common stock on the date of exercise over the base value of the grant. The terms of such SARs require
net settlement in shares of common stock and do not provide for cash settlement. RSUs represent a contingent right to receive one share of
the Company’s common stock at a future date. The majority of awards previously granted vest on a pro-rata basis for periods ranging
from one to five years and are expensed accordingly on a straight-line basis. The Company issues new shares upon exercise or conversion
of awards under these plans.
For the year ended December 31, 2009, total compensation cost related to nonvested awards not yet recognized was approximately
$4,500,000. The weighted-average period over which this compensation cost is expected to be recognized is approximately one year. The
aggregate intrinsic value for options and RSUs outstanding at December 31, 2009 and 2008 was approximately $17,500,000 and
$24,900,000, respectively. The aggregate intrinsic value for options and RSUs vested totaled approximately $12,200,000 and
$13,300,000 at December 31, 2009 and 2008, respectively. At December 31, 2009, the weighted-average contractual life for outstanding
and exercisable options and RSUs was five years. For the years ended December 31, 2009, 2008, and 2007, $8,578,000, $12,977,000,
and $14,300,000 of share-based compensation cost was recorded, respectively. The total income tax benefit recognized in the consolidated
statements of income for share-based compensation arrangements was approximately $3,400,000, $5,200,000, and $5,700,000 for 2009,
2008, and 2007, respectively. There have been no modifications to valuation methodologies or methods during the years ended
December 31, 2009, 2008, and 2007.
For the years ended December 31, 2008 and 2007 the fair value for options and SARs granted was estimated using a Black-Scholes
option pricing model with the following weighted-average assumptions, respectively: risk-free interest rate of 3.5% and 4.6%; dividend
yield of 3.0% and 3.1%; annual historical volatility factor of the expected market price of the Company’s common stock of 17% and
21%; an average expected life and estimated turnover based on the historical pattern of existing grants of six years and 4.0% to 5.1%,
respectively. The fair value of RSUs is based on the price of the Company’s stock on the date of grant. The Company had no grant
activity for the year ended December 31, 2009. The total fair value of shares vested during the years ended December 31, 2009, 2008,
and 2007, was $13,200,000, $14,900,000, and $10,500,000, respectively.
A summary of the Company’s stock option activity and related information is as follows:




 

Outstanding at beginning of year 7,471 $ 41
Granted — —
Exercised (434) 31
Forfeited (288) 44
Outstanding at end of year (3) 6,749 $ 41
Exercisable at end of year 5,356 $ 40
Shares available for future grants 5,406
(1) Shares include Restricted Stock Units (RSUs).
(2) The weighted-average exercise price excludes RSUs.
F-16