Safeway 2009 Annual Report Download - page 74

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
2007 Equity and Incentive Award Plan In May 2007, the stockholders of Safeway approved the 2007 Plan. Under
the 2007 Plan, Safeway may grant or issue stock options, stock appreciation rights, restricted stock units, deferred stock,
dividend equivalents, performance awards and stock payments, or any combination thereof. Safeway may grant incentive
and non-qualified options to purchase common stock at an exercise price equal to or greater than the fair market value at
the grant date, as determined by the Executive Compensation Committee of the Safeway Board of Directors. Options to
purchase 8.7 million shares were available for grant at January 2, 2010 under this plan. Shares issued, as a result of stock
option exercises, will be funded with the issuance of new shares.
Restricted Stock The Company awarded 450,150 shares, 40,000 shares and 100,000 shares of restricted stock in
2009, 2008 and 2007, respectively, to certain officers and key employees. These shares vest over a period of between
three to five years and are subject to certain transfer restrictions and forfeiture prior to vesting. Deferred stock
compensation, representing the fair value of the stock at the measurement date of the award, is amortized to
compensation expense over the vesting period. The amortization of restricted stock resulted in compensation expense of
$2.5 million in 2009, $0.9 million in 2008 and $5.2 million in 2007.
The following table summarizes information about unvested Safeway restricted stock as of January 2, 2010:
Awards
Weighted-
average
grant date
fair value
Unvested, year-end 2008 110,296 $ 30.12
Granted 450,150 18.40
Vested (10,296) 30.09
Canceled (10,000) 18.28
Unvested, year-end 2009 540,150 $ 20.57
At date of vest, the fair value of restricted stock awards vested during the year was $0.2 million in 2009, $1.3 million in
2008 and $9.1 million in 2007. At January 2, 2010 there was $8.2 million of total unrecognized compensation cost
related to non-vested restricted stock awards. The cost is expected to be recognized over a weighted average period of
1.9 years.
Activity in the Company’s stock option plans for the year ended January 2, 2010 was as follows:
Options
Weighted-
average
exercise price
Aggregate
intrinsic
value
(in millions)
Outstanding, year-end 2008 38,598,854 $ 29.02 $ 57.3
2009 Activity:
Granted 6,490,009 18.46
Canceled (2,404,154) 33.61
Exercised (1,449,108) 19.75
Outstanding, year-end 2009 41,235,601 $ 27.41 $ 36.2
Exercisable, year-end 2009 (1) 22,016,845 $ 29.24 $ 15.1
Vested and expected to vest, year-end 2009 (2) 34,485,542 $ 27.85 $ 27.9
(1) The remaining weighted-average contractual life of these options is 1.8 years.
(2) The remaining weighted-average contractual life of these options is 2.9 years.
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