Cabela's 2006 Annual Report Download - page 88

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
14. STOCK OPTION PLANS
In March 2004, the Company adopted the Cabela’s Incorporated 2004 Stock Plan (the “2004 Plan”). The
2004 Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights,
nonvested stock, nonvested stock units and other stock-based awards to employees, directors and consultants. A
maximum of 2,752,500 shares, subject to adjustment in the event of a stock split, consolidation or stock dividend, of
the Company’s common stock are available for awards under the 2004 Plan. Options granted under the 2004 Plan
will have a term of no greater than ten years from the grant date and will become exercisable in accordance with
the vesting schedule determined at the time the awards are granted. At the end of fiscal 2006, there were 2,669,467
shares subject to options under the 2004 plan and 39,434 shares authorized and available for grant. The Company’s
policy has been to issue new shares for the exercise of stock options.
In March 2004, the Company adopted an Employee Stock Purchase Plan (the “ESPP”), under which shares
of common stock are available to be purchased by the Company’s employees. The maximum number of shares of
common stock available for issuance under the ESPP is 1,835,000, subject to adjustment in the event of a stock split,
consolidation or stock dividend. Employees are eligible to participate in the ESPP immediately upon hire. The
employee’s purchase price is 85% of the fair market value of the stock on the date of purchase. Each employee’s total
fair market value of purchases may not exceed twenty-five thousand dollars for the year. As of December 30, 2006,
256,118 shares had been issued under the ESPP and 1,578,882 shares were authorized and available for issuance.
Of the total shares issued in 2006, 25,061 were issued under a market purchase rather than a new issuance. The
Company intends to utilize a market purchase method when possible.
The Company’s 1997 Stock Option Plan (the “1997 Plan”) provided for the granting of incentive stock options
and nonqualified stock options to purchase shares of the Company’s common stock to officers, directors and key
employees. As of December 30, 2006, there were 2,217,942 shares subject to options under the 1997 Plan and no
shares available for grant. Options issued expire on the fifth or the tenth anniversary of the date of the grant. During
2003, the Company allowed employees to exercise options prior to vesting in exchange for a call option, as provided
for in the 1997 Plan. There were 18,350 shares remaining unvested as of December 30, 2006, with an estimated call
value of approximately $71. These shares have been included in the following tables.
On January 6, 2006, one of the Company’s employees with exercised unvested shares retired. As of January
6, 2006, 18,350 exercised unvested shares held by this employee were immediately vested as part of this employee’s
retirement agreement. At the time of this employee’s retirement, the value of the call option for these 18,350 shares
was $70 and the value of the stock subject to the call option was $310. The Company elected not to exercise its call
option and recognized a charge to compensation expense of $239 for the modification of the stock options under
Statement 123R in fiscal 2006.
Impact of the Adoption of FAS 123R using the modified prospective transition method beginning
January 1, 2006:
Effective January 1, 2006, the Company adopted the provisions of Statement No. 123 (revised 2004), Share-
Based Payment, which requires the measurement and recognition of compensation expense for all share-based
payment awards made to employees and directors including employee stock option awards and employee stock
purchases made under an employee stock purchase plan. The Company previously applied the recognition and
measurement provisions of APB Opinion No. 25 and related interpretations and provided the required pro forma
disclosures under FAS 123, Accounting for Stock-Based Compensation.
During the fiscal year ended December 30, 2006, share-based compensation expense was recorded for awards
granted since 2004 but not yet vested as of January 1, 2006. For these awards, the Company continues to recognize
compensation expense using the accelerated or graded method of amortization. Compensation cost for awards
granted after the adoption date is recognized using a straight-line amortization method over the vesting period.