Lowe's 1999 Annual Report Download - page 29

27
the “1994” and “1997” Incentive Plans, under which incentive
and non-qualified stock options, stock appreciation rights,
restricted stock awards and incentive awards may be granted to
key employees. No awards may be granted after January 31,
2004 under the 1994 plan and 2007 under the 1997 plan. Stock
options generally have terms ranging from 5 to 10 years,
normally vest evenly over 3 years, and are assigned an exercise
price of not less than the fair market value on the date of grant.
At January 28, 2000, there were 104,703 and 6,462,742 shares
available for grants under the 1994 and 1997 plans, respectively.
Option information is summarized as follows:
Weighted-
Average
Exercise Price
Key Employee Stock Option Plans Shares Per Share
(In Thousands)
Outstanding January 31, 1997 3,288 $16.97
Granted 1,612 $22.25
Canceled or Expired (33) $17.48
Exercised (120) $ 5.96
Outstanding January 30, 1998 4,747 $19.03
Granted 1,991 $41.20
Canceled or Expired (306) $20.04
Exercised (688) $18.83
Outstanding January 29, 1999 5,744 $26.69
Granted 1,144 $49.93
Canceled or Expired (620) $42.76
Exercised (735) $21.46
Outstanding at January 28, 2000 5,533 $32.36
Exercisable at January 28, 2000 3,270 $25.61
Outstanding
Weighted- Weighted-
Average Average
Range of Options Remaining Exercise
Exercise Prices (In Thousands) Term Price
$ 2.87 – $ 4.31 133 1.5 $ 3.09
10.36 – 15.54 170 4.8 11.77
17.39 – 26.09 2,379 2.4 21.07
26.37 – 39.56 373 7.0 30.76
41.41 – 62.12 2,474 6.0 46.55
$62.31 – $64.07 4 9.2 63.03
Totals 5,533 4.3 $32.36
Exercisable
Weighted-
Average
Range of Options Exercise
Exercise Prices (In Thousands) Price
$ 2.87 – $ 4.31 133 $ 3.09
10.36 – 15.54 170 11.77
17.39 – 26.09 1,952 20.69
26.37 – 39.56 319 30.08
41.41 – 62.12 695 45.02
$62.31 – $64.07 1 63.03
Totals 3,270 $25.61
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. No stock appreciation rights were awarded in the last
two years. A total of 253,700 stock appreciation rights were paid
out at the maximum level of $1.9 million during 1998 with no
remaining awards outstanding at January 29, 1999 and January
28, 2000. The costs of these rights were expensed over the
performance periods and reduced pre-tax earnings by $0.3 and
$0.9 million in 1998 and 1997, respectively.
Restricted stock awards of 10,000, and 870,700 shares,
with per share weighted-average fair values of $35.13, and
$24.80, were granted to certain executives in 1998 and 1997,
respectively. No restricted stock awards were granted in 1999.
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 1999, a total of 31,100 shares
were forfeited and 525,150 shares became vested. At January 28,
2000, grants totaling 1,517,650 shares are included in share-
holders’ equity and are being amortized as earned over periods
not exceeding seven years. Related expense (charged to co mpen-
sation expense) for 1999, 1998 and 1997 was $12.5, $18.5, and
$6.2 million, respectively.
In 1999, the Company’s shareholders approved the Lowe’s
Companies, Inc. Directors’ Stock Option Plan. During the term of
the Plan, each member of the Company’s Board of Directors will
be awarded 2,000 options on the date of the first board meeting
after each annual meeting of the Company’s shareholders (the
award date). The maximum number of shares available for grant
under the Plan is 250,000, subject to adjustment. No awards
may be granted under the Plan after the award date in 2008. The
options vest evenly over three years, expire after seven years and
are assigned a price equal to the fair market value of the
Company’s common stock on the date of grant. During 1999,
18,000 shares were granted under the Plan at a price of $51.69
per share. The Directors’ Stock Option Plan is intended to
replace the Directors’ Stock Incentive Plan which expired on
May 29, 1998. This Plan provided that, at the first Board meeting
following each annual meeting of shareholders, the Company
would issue each non-employee Director 500 shares of common
stock. Up to 50,000 shares were available for issuance under this
Plan. In 1998 and 1997, 12,000, and 8,000 shares, respectively,
were issued under the Plan. Prior to its expiration in 1994,
280,000 stock options were granted under a Non-Employee
Directors’ Stock Option Plan. In 1999, 1998 and 1997, 16,000,
40,000 and 24,000 shares, respectively, were exercised under
this Plan. No shares were canceled under the Plan in 1999, 1998,
and 1997. At January 28, 2000, 88,000 shares were exercisable.
Of the remaining outstanding options at January 28, 2000, the
exercise price per share ranges from $4.31 to $9.44 and their
weighted-average remaining term is 2.0 years.