Lowe's 2000 Annual Report Download - page 32

Lowe’s Companies, Inc.
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Shareholders’ Equity
Authorized shares of common stock were 1.4
billion at February 2, 2001 and January 28, 2000.
The Company has 5million authorized shares of preferred
stock ($5par), none of which have been issued. The Board of
Directors may issue the preferred stock (without action by share-
holders) in one or more series, having such voting rights, dividend
and liquidation preferences and such conversion and other rights as
may be designated by the Board of Directors at the time of issuance.
The Company has a shareholders rights plan, which provides
for the distribution of one preferred share purchase right on each
outstanding share of common stock. Purchase rights become dis-
tributable and exercisable only if a person or group acquires or
commences an offer to acquire 15% or more of Lowe’s common
stock. Once exercisable, each purchase right will entitle sharehold-
ers (other than the acquiring person or group) to buy a unit of a
series of preferred stock for $152.50; the price of the unit to the
acquiring person or group in such event would be $305. Each unit
is intended to be the economic equivalent of a share of common
stock, and the plan was adopted to act as a deterrent to unsolicited
offers to acquire control of the Company. The rights plan will
expire in 2008, unless the Company earlier redeems the rights.
The Company has two stock incentive plans, referred to as the
“1994” and “1997” Incentive Plans, under which incentive and non-
qualified stock options 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 5to 10 years, normally vest evenly over 3years, and are assigned
an exercise price of not less than the fair market value on the date of
grant. At February 2, 2001, there were 66,283 and 3,494,025 shares
available for grants under the 1994 and 1997 plans, respectively.
Stock option information related to the 1994 and 1997
Incentive Plans is summarized as follows:
Key Employee Stock Option Plans
Shares Weighted-Average
(In Thousands) Exercise Price Per Share
Outstanding at January 30, 1998 4,747 $19.03
Granted 1,991 $41.20
Canceled or Expired (306) $20.04
Exercised (688) $18.83
Outstanding at 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
Granted 3,685 $46.78
Canceled or Expired (836) $46.65
Exercised (628) $20.06
Outstanding at February 2, 2001 7,754 $38.86
Exercisable at February 2, 2001 4,711 $33.87
Outstanding Exercisable
Weighted- Weighted- Weighted-
Range of Average Average Average
Exercise Options Remaining Exercise Options Exercise
Prices (In Thousands) Term Price (In Thousands) Price
$ 2.87 - $ 4.17 37 0.6 $ 3.65 37 $ 3.65
10.36 - 15.04 132 3.7 11.65 132 11.65
17.39 - 25.79 1,936 3.3 21.17 1,936 21.17
26.37 - 39.46 279 6.2 31.75 256 31.49
41.41 - 61.31 5,366 5.6 46.58 2,348 46.29
$62.31 - $64.07 4 8.1 63.03 2 63.03
Totals 7,754 5.0 $ 38.86 4,711 $ 33.87
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 2000 and 1999. These
shares are nontransferable and subject to forfeiture for periods pre-
scribed by the Company. These shares may become transferable
and vested earlier based on achievement of certain performance
measures. During 2000, a total of 68,450 shares were forfeited and
720,200 shares became vested. At February 2, 2001, grants total-
ing 372,950 shares are included in shareholders’ equity and are
being amortized as earned over periods not exceeding four years.
Related expense (charged to compensation expense) for 2000,
1999 and 1998 was $7.3, $12.5, and $18.5million, respectively.
In 1999, the Company’s shareholders approved the Lowe’s
Companies, Inc. Directors’ Stock Option Plan. During the term of
the Plan, each non-employee Director will be awarded 2,000
options on the date of the first board meeting after each annual
note
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