Lowe's 1998 Annual Report Download - page 29

less than the fair market value on the date of grant. At January 29, 1999, there were 285,050 and 6,869,614 shares available
for grants under the 1994 and 1997 plans, respectively.
Option information is summarized as follows: Weighted-Average
Key Employee Stock Option Plans Shares Exercise Price Per Share
(In Thousands)
Outstanding at January 31, 1996 40 $19.38
Granted 2,430 $19.56
Canceled or Expired (20) $19.38
Outstanding at January 31, 1997 2,450 $19.56
Granted 1,494 $22.55
Canceled or Expired (20) $19.56
Exercised (4) $19.56
Outstanding at January 30, 1998 3,920 $20.70
Granted 1,736 $44.35
Canceled or Expired (249) $20.78
Exercised (621) $19.77
Outstanding at January 29, 1999 4,786 $29.40
Exercisable at January 29, 1999 1,620 $20.41
Of the 4,786,000 options outstanding at January 29, 1999, 3,054,000 options had exercise prices per share ranging from
$19.38 to $23.66 with a weighted-average remaining term of 3.2 years. The remaining options outstanding, totaling 1,732,000,
had exercise prices per share ranging from $34.78 to $45.00 with a weighted-average remaining term of 6.8 years. The exercise
prices per share of those options exercisable at January 29, 1999 range from $19.38 to $23.66.
Stock appreciation rights were denominated in units, which were comparable to a share of common stock for purposes
of determining the amount payable under an award. An award entitled the participant to receive the excess of the final value
of the unit over the fair market value of a share of common stock on the first day of the performance period, generally three
years. The final value was the average closing price of a share of common stock during the last month of the performance period.
Limits were established with respect to the amount payable on each unit. A total of 253,700 stock appreciation rights were
paid out at the maximum level of $1,902,750 during 1998 with no remaining awards outstanding at January 29, 1999. The
costs of these rights were expensed over the performance periods and have reduced pre-tax earnings by $0.3, $0.9 and $1.0
million in 1998, 1997 and 1996, respectively.
Restricted stock awards of 10,000, 870,700 and 777,100 shares, with per share weighted-average fair values of $35.13,
$24.80 and $16.57, were granted to certain executives in 1998, 1997 and 1996, respectively. These shares are nontransferable
and subject to forfeiture for periods prescribed by the Company. These shares may become transferable and vested earlier
based on achievement of certain performance measures. During 1998, a total of 280,100 shares were forfeited and 164,950
shares became vested. At January 29, 1999, grants totaling 1,548,750 shares are included in Shareholder’s Equity and are
being amortized as earned over periods not exceeding seven years. Related expense (charged to compensation expense) for
1998, 1997 and 1996 was $18.5, $6.2 and $1.9 million, respectively.
The Company has a Directors’ Stock Incentive Plan. This Plan provides that at the first Board meeting following each
annual meeting of shareholders, the Company shall issue each non-employee Director 500 shares of common stock. Up to
50,000 shares may be issued under this Plan. In 1998, 1997 and 1996, 12,000, 8,000 and 8,000 shares, respectively, were
issued under this Plan. Prior to its expiration in 1994, 280,000 stock options were granted under a Non-Employee Directors’
Stock Option Plan. In 1998 and 1997, 40,000 and 24,000 shares, respectively, were exercised under this Plan. There were
no exercises under the Plan in 1996. No shares were canceled under the Plan in 1998, 1997 or 1996. At January 29, 1999,
104,000 shares were exercisable. Of the remaining outstanding options at January 29, 1999, the exercise price per share ranges
from $3.19 to $9.44 and their weighted-average remaining term is 2.6 years.
The Company applies APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in
accounting for its stock option plans. Accordingly, no compensation expense has been recognized for stock-based compensa-
tion where the option price of the stock approximated the fair market value of the stock on the date of grant, other than for
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