Safeway 2012 Annual Report Download - page 72

SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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Note I: Capital Stock
Shares Authorized and Issued Authorized preferred stock consists of 25 million shares, of which none
were outstanding during 2012, 2011 or 2010. Authorized common stock consists of 1.5 billion shares at $0.01
par value per share. Common stock outstanding at year-end 2012 was 239.5 million shares (net of 365.8
million shares of treasury stock) and 296.6 million shares at year-end 2011 (net of 307.9 million shares of
treasury stock).
Stock Option Plans Under Safeway’s stock option plans, the Company 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. Options generally vest over four or five years. Vested options are exercisable in
part or in full at any time prior to the expiration date of six to 10 years from the date of the grant.
1999 Amended and Restated Equity Participation Plan Under the 1999 Amended and Restated Equity
Participation Plan (the “1999 Plan”), options generally vest over five or seven years. Although the 1999 Plan
remains in full force and effect, there will be no more grants under this plan. Vested options are exercisable
in part or in full at any time prior to the expiration date of six to 10 years from the date of the grant. Shares
issued as a result of stock option exercises will be funded with the issuance of new shares. The 2007 Equity
and Incentive Award Plan (the “2007 Plan”) and the 2011 Equity and Incentive Award Plan (the "2011 Plan"),
discussed below, succeed the 1999 Plan.
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. Options to purchase 5.5
million shares were available for grant at December 29, 2012 under this plan. Shares issued as a result of
the 2007 Plan may be treasury shares authorized but unissued shares or shares purchased in the open
market.
2011 Equity and Incentive Award Plan In May 2011, the stockholders of Safeway approved the 2011 Plan.
Under the 2011 Plan, Safeway may grant or issue stock options, stock appreciation rights, restricted stock,
restricted stock units, deferred stock, dividend equivalents, performance awards and stock payments, or
any combination thereof to participants other than Safeway's Chief Executive Officer. 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. At December 29, 2012, 13.6 million shares of common stock were
available for issuance under this plan. Shares issued as a result of the 2011 Plan may be treasury shares,
authorized but unissued shares or shares purchased in the open market.
Restricted Stock The Company awarded 695,816 shares, 1,470,625 shares and 1,129,780 shares of
restricted stock in 2012, 2011 and 2010, 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 $13.1 million in 2012, $10.5 million in 2011 and $6.1
million in 2010.
Performance Share Awards In 2012, Safeway granted performance share awards to certain executives
for the first time. These performance share awards, covering a target of approximately 1.1 million shares,
will vest over three years and are subject to the achievement of earnings per share goals determined on a
compound annual growth rate basis relative to the S&P 500. If these goals are achieved above a certain
level and Safeway meets certain Total Shareholder Return criteria, certain executives may receive additional
shares of stock above the target number of performance shares, subject to a specified maximum. Likewise,
executives may earn less than the target number of performance shares. The Company recorded $10.0