Under Armour 2008 Annual Report Download - page 79

Included in the tables above are 185.8 thousand performance-based stock options granted to the Company’s
new President upon his hiring in July 2008. The performance-based stock options have an exercise price of
$28.93, a term of ten years from the grant date and vest in four equal installments subject to the achievement of
four separate annual operating income targets. If an annual operating income target is not achieved by a certain
date, the portion of the award tied to that performance level will be forfeited. The weighted average fair value of
each of the performance-based stock options was $16.16 and was estimated using the Black-Scholes option-
pricing model consistent with the weighted average assumptions included in the table above. As of December 31,
2008, the Company has not recorded stock-based compensation expense for the performance-based stock options
as the Company is unable to predict at this time whether the annual operating income targets will be achieved.
The Company will assess the probability of the achievement of each annual operating income target at the end of
each reporting period. When it becomes probable that a performance target will be achieved, a cumulative
adjustment will be recorded as if ratable stock-based compensation expense had been recorded since the grant
date.
Restricted Stock and Restricted Stock Units
A summary of the Company’s restricted stock and restricted stock units as of December 31, 2008, 2007, and
2006, and changes during the years then ended is presented below:
Year Ended December 31,
(In thousands, except per share amounts) 2008 2007 2006
Number of
Restricted
Shares
Weighted
Average
Value
Number of
Restricted
Shares
Weighted
Average
Value
Number of
Restricted
Shares
Weighted
Average
Value
Outstanding, beginning of year 362 $42.06 210 $23.81 125 $ 7.79
Granted 404 36.55 254 48.59 110 39.32
Forfeited (45) 51.74 (17) 42.72 (7) 17.93
Vested (82) 39.63 (85) 16.51 (18) 9.16
Outstanding, end of year 639 $38.27 362 $42.06 210 $23.81
Total stock-based compensation expense for the years ended December 31, 2008, 2007 and 2006 was $8.5
million, $4.2 million and $2.0 million, respectively. As of December 31, 2008, the Company had $29.9 million of
unrecognized compensation expense, excluding performance-based stock options, expected to be recognized over
a weighted average period of 3.7 years.
Warrants
On August 3, 2006, the Company issued fully vested and non-forfeitable warrants to purchase
480.0 thousand shares of the Company’s Class A Common Stock to NFL Properties as partial consideration for
footwear promotional rights which are recorded as an intangible asset (see Note 5). With the assistance of an
independent third party valuation firm, the Company assessed the fair value of the warrants using various fair
value models. Using these measures, the Company concluded that the fair value of the warrants was $8.5 million.
The warrants have a term of 12 years from the date of issuance and an exercise price of $36.99 per share, which
was the closing price of the Company’s Class A Common Stock on August 2, 2006. As of December 31, 2008,
240.0 thousand warrants are exercisable, and the remaining 240.0 thousand warrants will become exercisable
three years from the issue date. As of December 31, 2008, no warrants have been exercised.
13. Other Employee Benefits
The Company offers a 401(k) Deferred Compensation Plan for the benefit of eligible employees. Employee
contributions are voluntary and subject to Internal Revenue Service limitations. The Company matches a portion
of the participant’s contribution and recorded expense for the years ended December 31, 2008, 2007 and 2006, of
$1.1 million, $0.9 million and $0.7 million, respectively. Shares of the Company’s Class A Common Stock are
not an investment option in this plan.
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