O'Reilly Auto Parts 2000 Annual Report Download - page 31

2000 AR
29
NOTE 11 – STOCK OPTION PLANS
The Company has a stock option plan under which incentive stock
options or non-qualified stock options may be granted to officers
and key employees. An aggregate of 6,000,000 shares of common
stock is reserved for future issuance under this plan. The exercise
price of options granted shall not be less than the fair market
value of the stock on the date of grant and the options will expire
no later than 10 years from the date of grant. Options granted
pursuant to the plan become exercisable no sooner than six months
from the date of grant. In the case of a shareholder owning more
than 10% of the outstanding stock of the Company, the exercise
price of an incentive option may not be less than 110% of the fair
market value of the stock on the date of grant, and such options
will expire no later than 10 years from the date of grant. Also,
the aggregate fair market value of the stock with respect to
which incentive stock options are exercisable for the first time
by any individual in any calendar year may not exceed $100,000.
A summary of outstanding stock options is as follows:
Price Number
per Share of Shares
Outstanding at
December 31, 1997 $ 4.38 – 14.00 2,672,400
Granted 12.38 – 22.91 823,750
Exercised 4.38 – 16.07 (238,600)
Canceled 4.38 – 20.88 (68,700)
Forfeitures 4.38 (5,000)
Outstanding at
December 31, 1998 5.94 – 22.91 3,183,850
Granted 18.44 – 26.75 1,148,000
Exercised 5.94 – 18.75 (948,620)
Canceled 6.75 – 26.38 (35,750)
Forfeitures 6.07 (1,000)
Outstanding at
December 31, 1999 6.07 – 26.75 3,346,480
Granted 10.56 – 24.38 581,250
Exercised 6.07 – 22.75 (361,875)
Canceled 10.00 – 25.88 (206,625)
Outstanding at
December 31, 2000 $ 8.00 – 26.75 3,359,230
Options to purchase 1,729,033, 1,171,888 and 855,100 shares of
common stock were exercisable at December 31, 2000, 1999, and
1998, respectively.
The Company also maintains a stock option plan for non-employee
directors of the Company under which 300,000 shares of common
stock are reserved for future issuance. All director stock options are
granted at fair market value on the date of grant and expire on the
earlier of termination of service to the Company as a director or
seven years. Options granted under this plan become exercisable
six months from the date of grant. A summary of outstanding
stock options is as follows:
Price Number
per Share of Shares
Outstanding at
December 31, 1997 $ 4.38 – 9.10 60,000
Granted 13.50 20,000
Exercised 4.38 (10,000)
Canceled – –
Outstanding at
December 31, 1998 6.56 – 13.50 70,000
Granted 23.91 20,000
Exercised – –
Canceled – –
Outstanding at
December 31, 1999 6.56 – 23.91 90,000
Granted 12.44 20,000
Exercised 6.56 – 6.75 (20,000)
Canceled – –
Outstanding at
December 31, 2000 $ 9.09 – 23.91 90,000
All options under this plan were exercisable at December 31,
2000, 1999, and 1998.
Pro forma information regarding net income and earnings per
share is required by SFAS No. 123, and has been determined as if
the Company had accounted for its employee and non-employee
director stock options under the fair value method of that SFAS.
The fair values for these options were estimated at the date of
grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2000, 1999 and 1998, respectively:
risk-free interest rates of 5.02%, 6.54% and 4.74%; volatility factors
of the expected market price of the Company’s common stock of
.442, .247, .221; and weighted-average expected life of the
options of 8.9, 8.0 and 8.0 years. The Company assumed a 0%
dividend yield over the expected life of the options. The weighted-
average fair values of options granted during the years ended
December 31, 2000, 1999, and 1998 were $9.24, $10.22 and
$6.44, respectively. The weighted-average remaining contractual
life at December 31, 2000, for all outstanding options under the
Company’s stock option plans is 7.1 years. The weighted-average
exercise price for all outstanding options under the Company’s
stock option plans was $16.12 at December 31, 2000.