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PG.58 O’REILLY AUTOMOTIVE 2008 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
sharing and matching contributions at an average grant date fair value of $34.34. A portion of these shares related to prot sharing contributions
accrued in prior periods. At December 31, 2008, approximately 542,000 shares were reserved for future issuance under this plan.
On July 11, 2008 in conjunction with the acquisition of CSK, the Company became the sponsor for a 401(k) plan that is available to all CSK
team members who are at least 21 years of age. e Company matches from 40% to 60% of participant contributions in 10% increments, based
on years of service, up to 4% of the participant’s base salary. e Company matching contributions vest aer one year of plan participation or
three years of Company service. e Company’s matching contributions since the July 11, 2008 acquisition date through December 31, 2008
totaled $0.9 million. e CSK 401(k) plan was merged with the Company’s prot sharing and savings plan eective January 1, 2009.
e Company has in eect a performance incentive plan for the Company’s senior management under which the Company awards shares of
restricted stock that vest equally over a three-year period and are held in escrow until such vesting has occurred. Shares are forfeited when an
employee ceases employment. A total of 650,000 shares of common stock have been authorized for issuance under this plan. Shares awarded
under this plan are valued based on the market price of the Company’s common stock on the date of grant and compensation cost is recorded
over the vesting period. e Company recorded $494,000 of compensation cost for this plan for the year ended December 31, 2008 and
recognized a corresponding income tax benet of $190,000. e Company recorded $459,000 of compensation cost for this plan for the year
ended December 31, 2007 and recognized a corresponding income tax benet of $169,000. e Company recorded $416,000 of compensation
cost for this plan for the year ended December 31, 2006 and recognized a corresponding income tax benet of $154,000. e total fair value
of shares vested (at vest date) for the years ended December 31, 2008, 2007 and 2006 were $497,000, $478,000 and $503,000, respectively. e
remaining unrecognized compensation cost related to unvested awards at December 31, 2008 was $457,000. e Company awarded 16,830
shares under this plan in 2008 with an average grant date fair value of $26.96. e Company awarded 16,189 shares under this plan in 2007 with
an average grant date fair value of $34.02. e Company awarded 18,698 shares under this plan in 2006 with an average grant date fair value of
$33.12. Compensation cost for shares awarded is recognized over the three-year vesting period. Changes in the Company’s restricted stock for
the year ended December 31, 2008 were as follows:
Weighted -
Average
Aggregate
Grant Date
Shares Fair Value
Non-vested at December 31, 2007 15,123 $ 30.80
Granted during the period 16,830 26.96
Vested during the period (16,157) 31.19
Forfeited during the period (415) 27.63
Non-vested at December 31, 2008 15,381 $ 29.13
At December 31, 2008, approximately 480,000 shares were reserved for future issuance under this plan.
SUPPLEMENTAL RETIREMENT PLAN AGREEMENT
In conjunction with the CSK acquisition on July 11, 2008, the Company assumed a supplemental executive retirement plan agreement with
CSK’s former Chairman and Chief Executive Ocer, Maynard Jenkins, which provides supplemental retirement benets for a period of 10 years
beginning on the rst anniversary of the eective date of termination of his employment. Mr. Jenkins retired on August 15, 2007. e benet
amount in this agreement is fully vested and payable to Mr. Jenkins at a rate of $600,000 per annum. e Company has accrued the entire
present value of this obligation of approximately $4.0 million as of the July 11, 2008 acquisition date. Payments of $0.6 million were made to
Mr. Jenkins since the July 11, 2008, acquisition date.