Nautilus 2006 Annual Report Download - page 50

Table of Contents
unless extended by the Board of Directors. The repurchase program does not obligate the Company to acquire any specific number of shares or
acquire shares over any specified period of time. During the year ended December 31, 2006, the Company acquired 1.3 million shares of
common stock at an average price of $12.42 per share for a total cost of $16.7 million. During 2005, the Company acquired 0.8 million shares
of common stock at an average price of $18.82 per share for a total cost of $15.6 million.
Share-Based Compensation
In July 2003, certain stock options were granted to the Company’
s President and Chief Executive Officer at an exercise price of $2.00 per
share below the market price on the day of the grant. The Company recognized compensation expense of $0.3 million, $0.4 million, and $0.3
million in 2006, 2005, and 2004, respectively. This arrangement was amended December 31, 2005 to eliminate the original discount per share.
2005 Long-Term Incentive Plan
In 2005, the Company’s shareholders approved the 2005 Long-Term Incentive Plan (the “2005 Plan”). The 2005 Plan permits flexibility
in types of awards and specific terms of awards, which allow future awards to be based on then-current objectives for aligning compensation
with increasing long-term shareholder value. The aggregate number of shares of common stock authorized for issuance as awards under the
2005 Plan is 4.0 million, plus any shares of common stock that were previously reserved for issuance under the Company’s Stock Option Plan
and were not subject to grant on June 6, 2005, or as to which the option award is forfeited on or after June 6, 2005. The maximum aggregate
number of shares of common stock subject to stock options, stock appreciation rights, restricted stock or performance unit awards which may
be granted to any one participant in any one year under the 2005 Plan is 1.0 million. The aggregate number of shares available for issuance
under the 2005 Plan is reduced by two shares for each share delivered in settlement of any stock appreciation rights, restricted stock, stock unit
or performance unit award, and one share for each share delivered in settlement of a stock option award. At December 31, 2006, 3.5 million
shares were available for future issuance under the 2005 Plan.
Stock Options
Stock option awards are granted with an exercise price equal to the market price of the Company’s stock based on the closing market
price of the Company’s common stock on the date preceding the grant date, generally vest based on four years of continuous service and,
starting with the adoption of the 2005 Plan, have a seven year contractual term (options issued prior to the adoption of the 2005 Plan have a ten
year term). The fair value of each award was estimated on the grant date using the Black
-Scholes-Merton option pricing model with the
weighted-average assumptions described in Note 1 to these consolidated financial statements.
A summary of the Company’s stock option plan activity is as follows:
48
(In thousands, except exercise price) Total
Shares
Weighted
-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2005
2,277
$
17.39
Granted
661
15.61
Forfeited or canceled
(171
)
19.45
Expired
(153
)
24.75
Exercised
(46
)
12.94
$
165
Outstanding at December 31, 2006
2,568
$
16.44
6.41
$
2,879
Exercisable at December 31, 2006
996
$
17.22
6.10
$
1,489