Supercuts 2010 Annual Report Download - page 137

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. SHAREHOLDERS' EQUITY (Continued)
Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted
during fiscal years 2010, 2009 and 2008 were as follows:
The expense associated with the RSA and RSU grants is based on the market price of the Company's stock at the date of grant. The
significant assumptions used in determining the underlying fair value on the date of grant of each stock option and SAR grant issued during the
fiscal years 2010, 2009 and 2008 is presented below:
The risk free rate of return is determined based on the U.S. Treasury rates approximating the expected life of the options and SARs
granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an
analysis of historical stock options granted data which included analyzing grant activity including grants exercised, expired, and canceled. The
expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the
grant. The Company uses historical data to estimate pre-vesting forfeiture rates.
Compensation expense included in income before income taxes related to stock- based compensation was $9.3, $7.5, and $6.8 million for
the three years ended June 30, 2010, 2009, and 2008, respectively.
Authorized Shares and Designation of Preferred Class:
The Company has 100 million shares of capital stock authorized, par value $0.05, of which all outstanding shares, and shares available
under the Stock Option Plans, have been designated as common.
In addition, 250,000 shares of authorized capital stock have been designated as Series A Junior Participating Preferred Stock (preferred
stock). None of the preferred stock has been issued.
Shareholders' Rights Plan:
The Company has a shareholders' rights plan pursuant to which one preferred share purchase right is held by shareholders for each
outstanding share of common stock. The rights become exercisable only following the acquisition by a person or group, without the prior
consent of the Board of Directors, of 15.0 percent or more of the Company's voting stock, or following the announcement of a tender offer or
exchange offer to acquire an interest of 15.0 percent or more. If the rights become exercisable, they entitle all holders, except the takeover
bidder, to purchase one one-thousandth of a
133
2010 2009 2008
Stock options
$
7.36
$
8.60
$
8.60
SARs
8.60
7.07
8.60
Restricted stock awards
19.12
19.14
28.57
Restricted stock units
—
—
—
2010 2009 2008
Risk
-
free interest rate
2.79
%
2.45
-
3.29%
3.29
%
Expected term (in years)
5.50
5.50
5.50
Expected volatility
42.00
%
28.00
-
40.00%
28.00
%
Expected dividend yield
0.85
%
0.56
-
0.84%
0.56
%