Sally Beauty Supply 2007 Annual Report Download - page 100

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$2.6 million in connection with certain retirement eligible employees who are eligible to continue vesting awards upon retirement under the terms of the 2007
Plan. Additionally, during fiscal year 2007, the Company granted approximately 0.1 million restricted stock units ("RSUs") to certain of its non-employee
directors under the 2007 Plan.
Prior to November 16, 2006, the Company was a subsidiary of Alberto-Culver and had no share-based compensation plans of its own; however, certain
employees of the Company had been granted stock options and stock awards under share-based compensation plans of Alberto-Culver. Alberto-Culver treated
the Separation Transactions as though they constituted a change in control for purposes of Alberto-Culver's stock options and stock awards. As a result, in
accordance with the terms of these plans, all outstanding stock options and stock awards of Alberto-Culver, including those held by the Company's employees,
became fully vested upon completion of the Separation Transactions on November 16, 2006. Due to the Separation Transactions, the Company recorded a charge
at that time equal to the amount of future compensation expense of approximately $5.3 million that would have been recognized in subsequent periods as the
stock options and stock awards for the Company's employees vested over the original vesting periods. Upon completion of the Separation Transactions, all
outstanding Alberto-Culver stock options and stock awards held by employees of the Company became options to purchase shares of the Company's common
stock.
As a result of the Separation Transactions, the Employee Stock Option Plan of 2003, the 2003 Stock Option Plan for Non-Employee Directors and the 2003
Restricted Stock Plan that were previously plans of Alberto-Culver became plans of the Company. During fiscal year 2007, the Company granted approximately
2.8 million stock options to employees and directors, and granted approximately 0.4 million restricted share awards to employees under these plans.
Stock Options
Each option has an exercise price which equals 100% of the market price of the Company's stock on the date of grant and generally has a maximum term of
10 years. Options generally vest ratably over a four year period and are subject to forfeiture until the four year vesting period is complete.
The following table presents a summary of the activity for the Company's stock option plans:
Number of
Outstanding
Options (in
Thousands)
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term (In
Years)
Aggregate
Intrinsic
Value (In
Thousands)
Outstanding at September 30, 2006 1,969 $ 37.47
Shares conversion(a) 1,073 2.00
Granted 5,246 9.53
Exercised (1,011) 7.56
Forfeited or expired (419) 9.79
Outstanding at September 30, 2007 6,858 $ 7.37 8.8 $ 12,862
Exercisable at September 30, 2007 2,566 $ 3.78 7.8 $ 12,705
(a)
Per the Employee Matters Agreement, in connection with the Separation Transactions, options to purchase shares of Alberto-Culver's
common stock, which were held by the Company's employees, were converted into options to purchase shares of the Company's common
stock. In order to maintain the same intrinsic value as before the separation, all of the Company's stock options that were converted from
Alberto-Culver were adjusted accordingly.
F-18
Source: Sally Beauty Holding, 10-K, November 29, 2007