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NOTE 13 - STOCK PROGRAMS
As of June 30, 2007, the Company has three active equity
compensation plans which include the Amended and
Restated Fiscal 2002 Share Incentive Plan, the Fiscal 1999
Share Incentive Plan and the Non-Employee Director
Share Incentive Plan (collectively, the "Plans"). These
Plans currently provide for the issuance of 32,894,400
shares, which consist of shares originally provided for and
shares transferred to the Plans from a previous plan and
employment agreement, to be granted in the form of
stock-based awards to key employees, consultants and
non-employee directors of the Company. As of June 30,
2007, approximately 8,532,300 shares of Class A Common
Stock were reserved and available to be granted pursuant
to these Plans. The Company may satisfy the obligation of
its stock-based compensation awards with either new or
treasury shares. The Company's stock compensation
awards outstanding at June 30, 2007 include stock
options, performance share units ("PSU"), restricted stock
units ("RSU") and share units.
Stock-based compensation expense is attributable to
the granting of, and the remaining requisite service periods
of, stock options, PSUs, RSUs and share units. Compensation
expense attributable to net stock-based compensation for
fiscal 2007 and 2006 was $43.2 million ($28.3 million
after tax) and $35.7 million ($23.4 million after tax),
respectively, or $.14 and $.11 for both basic and diluted
net earnings per common share, respectively. As of
June 30, 2007 and 2006, the total unrecognized compensation
cost related to nonvested stock-based awards was
$30.4 million and $26.3 million, respectively, and the
related weighted-average period over which it is expected
to be recognized is approximately 1.8 years and 2.2 years,
respectively.
Prior to the Company's adoption of SFAS No. 123(R) in
fiscal 2006, SFAS No. 123 required that the Company provide
pro forma information regarding net earnings and
net earnings per common share as if compensation cost
for the Company's stock-based awards had been determined
in accordance with the fair value method prescribed
therein. The Company had previously adopted
the disclosure portion of SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure,"
requiring quarterly SFAS No. 123 pro forma disclosure.
The pro forma charge for compensation cost related to
stock-based awards granted was recognized over the
service period. For stock options, the service period
represents the period of time between the date of grant
and the date each option becomes exercisable without
consideration of acceleration provisions (e.g., retirement,
change of control, etc.).
The following table illustrates the effect on net earnings
per common share as if the fair value method had been
applied to all outstanding awards for fiscal 2005:
Stock Options
A summary of the Company's stock option programs as of June 30, 2007 and changes during the fiscal year then ended
is presented below:
The exercise period for all stock options generally may not
exceed ten years from the date of grant. Stock option
grants to individuals generally become exercisable in
three substantively equal tranches over a service period of
up to four years. The Company attributes the value of
option awards on a straight-line basis over the requisite
service period for each separately vesting portion of the
award as if the award was, in substance, multiple awards.
The per-share weighted-average grant date fair value of
stock options granted during fiscal 2007, 2006 and 2005
was $13.69, $11.87 and $16.45, respectively. The total
intrinsic value of stock options exercised during fiscal
2007, 2006 and 2005 was $72.3 million, $38.0 million and
$73.2 million, respectively.
The fair value of each option grant was estimated on the
date of grant using the Black-Scholes option-pricing model
with the following assumptions:
Performance Share Units
During fiscal 2007, the Company issued 119,000 PSUs,
which will be settled in stock subject to the achievement
of the Company's net sales and net earnings per share
goals for the three years ending June 30, 2009. Settlement
will be made pursuant to a range of opportunities
relative to the net sales and net earnings per share targets
of the Company and, as such, the compensation cost of
the PSU is subject to adjustment based upon the attainability
of these target goals. No settlement will occur for
results below the applicable minimum threshold and additional
shares shall be issued if performance exceeds the
targeted performance goals. PSUs are accompanied by
dividend equivalent rights that will be payable in cash
upon settlement of the PSU. These awards are subject to
the provisions of the agreement under which the PSUs
are granted. The PSUs were valued at the closing market
value of the Company's Class A Common Stock on the
date of grant and generally vest at the end of the performance
period.
The following is a summary of the status of the
Company's PSUs as of June 30, 2007 and activity during
the fiscal year then ended:
Restricted Stock Units
The Company granted approximately 603,100 RSUs
during fiscal 2007, of which 332,800 are scheduled to vest
on October 31, 2007, 173,500 on October 31, 2008 and
96,800 on November 2, 2009, all subject to the con tinued
employment or retirement of the grantees. Certain RSUs
granted in fiscal 2007 are accompanied by dividend
equivalent rights that will be payable in cash upon settlement
of the RSU and, as such, were valued at the closing
market value of the Company's Class A Common Stock
on the date of grant. Other RSUs granted in fiscal 2007
are not accompanied by dividend equivalent rights and,
as such, were valued at the closing market value of the
Company's Class A Common Stock on the date of grant
less the discounted present value of the dividends
expected to be paid on the shares during the vesting
period.
The following is a summary of the status of the Company's
RSUs as of June 30, 2007 and activity during the
fiscal year then ended:
Share Units
The Company grants share units to certain non-employee
directors under the Non-Employee Director Share Incentive
Plan. The share units are convertible into shares of
Class A Common Stock as provided for in that plan. Share
units are accompanied by dividend equivalent rights that
are converted to additional share units when such
dividends are declared. The following is a summary of the
status of the Company's share units as of June 30, 2007
and activity during the fiscal year then ended:
Cash Units
Certain non-employee directors defer cash compensation
in the form of cash payout share units, which are not
subject to the Plans. These cash units are classified as liabilities
and, as such, their fair value is adjusted to reflect
the current market value of the Company's Class A
Common Stock. The Company recorded $0.8 million,
$0.5 million and $0.1 million as compensation expense to
reflect additional deferrals and the change in the market
value for fiscal 2007, 2006 and 2005, respectively.
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