(17) Stock-Based Incentive Compensation Plans
We have stock options outstanding under several plans: Fleetwood's Amended and Restated 1992 Stock-Based Incentive Compensation Plan ("1992 Plan"), 2007 Stock Incentive Plan ("2007 Plan"), and the 1992 Non-Employee Director Stock Option Plan ("D92 Plan"). In September 2007, the shareholders approved the 2007 Plan, and all subsequent grants have been from this plan. No further grants may be made under the 1992 Plan or the D92 Plan and all outstanding options under these plans continue to be governed by the terms and conditions of the existing option agreements for those grants. Under the 2007 Plan, Fleetwood is authorized to grant up to 5,000,000 shares plus any shares that were authorized for issuance under the prior plans, but not issued to its officers, key employees, and non-employee directors. As of the date of shareholder approval, there were 5,882,006 shares available for grant under the 2007 Plan. The number of shares issuable under the 2007 Plan may increase in the future as shares become available under the prior plans. Options were also granted to Elden L. Smith, Fleetwood's President and Chief Executive Officer, as an inducement to his becoming an employee of Fleetwood, under a separate plan that, under the rules of the New York Stock Exchange, was not required to be approved by shareholders.
Beginning with the first quarter of fiscal 2007, performance-based restricted stock units were granted, under Fleetwood's Amended and Restated 1992 Stock-Based Incentive Compensation Plan, at no cost to officers and certain employees. The performance-based restricted stock units are awarded at the beginning of a one-year performance period. Depending upon the actual achievement of the performance criteria, the number of restricted stock units can vary in number from 0% to 125% of the initial award. Performance is measured against established targets for earnings per share (EPS) or segment operation returns (for awards granted to employees of operating groups) during the one-year performance period. The restricted stock units time-vest ratably over a three-year service period subsequent to the performance period. Under certain qualifying conditions, such as retirement, early retirement, disability, or death, the vesting schedule will accelerate. The fair value of each restricted stock unit is measured on the date of grant using the grant date price of Fleetwood's stock and recorded as compensation cost over the remaining service period when it is probable that the performance condition will be achieved. If such goals are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. All of these plans are shareholder approved, other than the previously mentioned Elden L. Smith Plan.
A summary of option activity under the Plan as of April 27, 2008, and changes during the year then ended is presented below:
| Options | Shares | Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (Years) |
Aggregate Intrinsic Value |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Outstanding at April 29, 2007 | 4,483,904 | $ | 13.38 | 5.69 | $ | 4,023,565 | |||||||||
| Granted | 1,211,400 | 5.81 | |||||||||||||
| Exercised | (145,433 | ) | 6.00 | ||||||||||||
| Forfeited | (70,159 | ) | 9.75 | ||||||||||||
| Expired | (318,340 | ) | 23.90 | ||||||||||||
| Outstanding at April 27, 2008 | 5,161,372 | $ | 11.21 | 6.13 | $ | 191,632 | |||||||||
| Exercisable at April 27, 2008 | 3,119,151 | $ | 13.91 | 4.35 | $ | 191,632 | |||||||||
The weighted-average grant-date fair value of options granted during the fiscal years ended 2008, 2007, and 2006 was $2.68, $3.32, and $4.83, respectively. The total intrinsic value of options exercised during the 2008, 2007, and 2006 fiscal years was approximately $590,000, $859,000, and $3.4 million, respectively.
As of April 27, 2008, there was a total of $2.5 million of unrecognized compensation cost related to nonvested stock options granted under Fleetwood's stock-based incentive compensation plans that will be recognized over the remaining weighted average vesting period of 2.14 years.
A summary of restricted stock award activity for the fiscal year ended April 27, 2008 is presented below:
| Restricted Stock Awards | Shares | Weighted Average Grant Date Fair Value |
|||||
|---|---|---|---|---|---|---|---|
| Nonvested at April 29, 2007 | — | $ | — | ||||
| Granted(1) | 248,238 | 8.71 | |||||
| Vested/issued(2) | (2,830 | ) | 8.76 | ||||
| Forfeited(3) | (135,317 | ) | 8.76 | ||||
| onvested at April 27, 2008 | 110,091 | $ | 8.64 | ||||
(1) During fiscal 2008, Fleetwood issued 52,190 restricted stock awards to non-employee directors and 196,048 performance-based restricted stock units to officers and key employees.
(2) In accordance with the 1992 Plan, the vesting of restricted stock units was accelerated for certain individuals who met the criteria for retirement once the performance condition was achieved.
(3) Fleetwood canceled 128,861 restricted stock units issued in the current year due to non-achievement of performance targets. The remaining 6,456 restricted stock units were forfeited due to termination of employment.
As of April 27, 2008, there was $300,000 of total unrecognized compensation cost related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted-average period of 3.0 years.
As a result of adopting SFAS No. 123R on May 1, 2006, a total share-based payment cost of $5.1 million and $3.4 million was recognized during the fiscal years ended April 27, 2008 and April 29, 2007, respectively, as a component of operating expenses.