Supercuts 2006 Annual Report Download - page 102

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
measure of compensation cost for its incentive stock plans, as well as an estimate of future compensation expense related to these awards.
No stock options have been granted under the 2004 Plan. Grants of restricted stock and SARs outstanding under the 2004 Plan, as well as
other relevant terms of the awards, were as follows:
Other:
The Company has agreed to pay the Chief Executive Officer, commencing upon his retirement, an amount equal to 60 percent of his
salary, adjusted for inflation, for the remainder of his life. Additionally, the Company has a survivor benefit plan payable upon his death at a
rate of one half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. In addition, the Company has
other unfunded deferred compensation contracts covering key executives based on their accomplishments within the Company. The key
executives’ benefits are based on years of service and the employee’s compensation prior to departure. The Company utilizes a June 30
measurement date for these deferred compensation contracts and a discount rate based on the Aa Bond index rate (5.25 and 6.25 percent at
June 30, 2006 and 2005, respectively). Compensation associated with these agreements is charged to expense as services are provided.
Associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $2.4, $2.2 and $2.1
million for fiscal years 2006, 2005 and 2004, respectively. Related obligations totaled $15.3 and $12.9 million at June 30, 2006 and 2005,
respectively, and are included in other non-current liabilities in the Consolidated Balance Sheet. The Company intends to fund its future
obligations under this plan through company-owned life insurance policies on the participants. Cash values of these policies totaled $12.8 and
$10.9 million at June 30, 2006 and 2005, respectively, and are included in other assets in the Consolidated Balance Sheet.
The Company also has entered into an agreement with the Vice Chairman of the Board of Directors (the Vice Chairman), providing that
the Vice Chairman will continue service with the Company until at least May 2007. The Company has agreed to pay the Vice Chairman an
annual amount of $0.6 million, adjusted for inflation, for the remainder of his life. The Vice Chairman has agreed that during the period in
which payments are made, as provided in the agreement, he will not engage in any business competitive with the business conducted by the
Company. Additionally, the Company has a survivor benefit plan for the Vice Chairman’s spouse, payable upon his death, at a rate of one half
of his deferred compensation
101
SARs Outstanding
Restricted
Stock
Outstanding
Weighted Average
Weighted Average
Shares
Exercise Price
Shares
Exercise Price
Balance, June 30, 2003
—
N/A
—
N/A
Granted
72,500
$
42.79
110,750
$
42.79
Balance, June 30, 2004
72,500
42.79
110,750
42.79
Granted
85,250
35.49
97,750
35.49
Cancelled
(2,000
)
42.79
(11,750
)
42.79
Vested/Exercised
(14,100
)
42.79
—
—
Balance, June 30, 2005
141,650
38.40
196,750
39.16
Granted
85,500
35.33
96,500
35.33
Cancelled
(2,850
)
39.59
(3,250
)
39.98
Vested/Exercised
(31,445
)
38.67
(58,750
)
40.31
Balance, June 30, 2006
192,855
$
36.92
231,250
$36.87