Nautilus 2007 Annual Report Download - page 56

Table of Contents
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 former President and Chief Executive Officer at a per share exercise price that
was $2.00 per share below the market price on the day of the grant. The Company recognized compensation expense of $0.5 million, $0.3
million, and $0.4 million related to these stock options in 2007, 2006, and 2005, respectively. This arrangement was amended December 31,
2005 to eliminate the original discount per share. Included in the compensation expense for 2007 is an additional $0.3 million of compensation
expense for the accelerated vesting of these options upon the departure of the former President and Chief Executive Officer.
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 stock based compensation 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, 2007,
2.9 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 closing market price of the Company’s common stock on the date preceding
the grant date. Stock option awards 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:
53
(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, 2006
2,568
$
16.44
Granted
1,240
11.62
Forfeited or cancelled
(589
)
17.10
Expired
(352
)
22.28
Exercised
(63
)
11.97
$
364
Outstanding at December 31, 2007
2,804
$
13.54
5.15
$
0
Exercisable at December 31, 2007
1,104
$
14.85
3.44
$
0