Sonic 2005 Annual Report Download - page 47

Stock Options
In January 2001 the stockholders of the Company adopted the 2001 Sonic Corp. Stock Option Plan (the ”2001
Employee Plan”) and the 2001 Sonic Corp. Directors’ Stock Option Plan (the ”2001 Directors’ Plan”). (The 2001
Employee Plan and the 2001 Directors’ Plan are referred to collectively as the ”2001 Plans.”) The 2001 Plans were
adopted to replace the 1991 Sonic Corp. Stock Option Plan and the 1991 Sonic Corp. Directors’ Stock Option Plan
(collectively, the ”1991 Plans”), because the 1991 Plans were expiring after ten years as required by the Internal
Revenue Code. Options previously granted under the 1991 Plans continue to be outstanding after the adoption of the
2001 Plans and are exercisable in accordance with the original terms of the applicable 1991 Plan.
Under the 2001 Employee Plan, the Company is authorized to grant options to purchase up to 4,050,000 shares of
the Company’s common stock to employees of the Company and its subsidiaries. Under the 2001 Directors’ Plan, the
Company is authorized to grant options to purchase up to 675,000 shares of the Company’s common stock to the
Company’s independent directors. At August 31, 2005, 583,933 shares were available for grant under the 2001
Employee Plan and 334,125 shares were available for grant under the 2001 Director’s Plan. The exercise price of the
options to be granted is equal to the fair market value of the Company’s common stock on the date of grant. Unless
otherwise provided by the Company’s Compensation Committee, options under both plans become exercisable
ratably over a three-year period or immediately upon change in control of the Company, as defined by the plans. All
options expire at the earlier of 30 days after termination of employment or ten years after the date of grant.
A summary of the Company’s stock option activity (adjusted for the stock splits), and related information was as
follows for the years ended August 31:
2005 2004 2003
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding–beginning of year 5,775,322 $11.79 5,949,084 $9.93 6,274,796 $ 8.22
Granted 719,397 31.80 743,135 21.39 878,552 17.57
Exercised (1,148,452) 9.41 (846,746) 6.63 (1,054,362) 5.39
Forfeited (129,348) 20.33 (70,151) 17.82 (149,902) 14.99
Outstanding–end of year 5,216,919 $14.87 5,775,322 $11.79 5,949,084 $9.93
Exercisable at end of year 3,826,957 $10.82 4,271,690 $9.08 4,292,694 $ 7.36
Weighted average fair value of
options granted during the year $ 13.44 $ 10.34 $ 8.30
A summary of the Company’s options was as follows as of August 31, 2005:
Options Outstanding Options Exercisable
Weighted
Number Average Weighted Number Weighted
Outstanding Remaining Average Exercisable Average
as of Contractual Exercise as of Exercise
Range of Exercise Prices 8/31/2005 Life (Yrs.) Price 8/31/2005 Price
$ 2.99 to $ 5.36 872,536 1.28 $ 3.85 872,536 $ 3.85
$ 5.72 to $ 8.59 1,066,398 3.68 7.77 1,066,398 7.77
$9.06 to $ 16.13 891,167 5.67 11.88 866,189 11.77
$16.45 to $ 19.54 1,029,665 7.30 18.39 812,746 18.56
$20.39 to $ 31.61 877,711 8.87 23.77 207,408 21.42
$ 31.71 to $ 32.48 479,442 9.57 32.37 1,680 32.48
$ 2.99 to $ 32.48 5,216,919 5.75 $ 14.87 3,826,957 $ 10.82
Stockholder Rights Plan
The Company has a stockholder rights plan which is designed to deter coercive takeover tactics and to
prevent a potential acquirer from gaining control of the Company without offering a fair price to all of the
Company’s stockholders.
Notes to Consolidated Financial Statements
August 31, 2005, 2004 and 2003 (In thousands, except share data)
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