CSS » Topics » Long-Term Incentives - Stock Options

This excerpt taken from the CSS DEF 14A filed Jun 15, 2007.
Long-Term Incentives — Stock Options
 
We utilize options to purchase our common stock as our principal form of long-term compensation. Our stock options:
 
  •  have a five-year term (or a ten-year term in the case of options granted prior to April 2004),
 
  •  vest as to one-quarter of the underlying shares on each of the first four anniversaries of the date of grant, and
 
  •  have an exercise price equal to the last sales price reported by the New York Stock Exchange on the day preceding the date of grant.
 
We believe that stock options provide a strong incentive to increase stockholder value, because the value of the stock options is entirely dependent on the increase in the market price of our common stock following the date of grant.
 
In April 2006, we granted stock options to each of our named executive officers, based on the multiples of annual salary in effect at that time for our named executive officers, as indicated in the following table:
 
                 
    Percent of
  Amount Available for
Name
  Salary   Option Grants
 
Christopher J. Munyan
    150 %   $ 525,000  
Clifford E. Pietrafitta
    150 %   $ 346,500  
Scott M. Shea
    150 %   $ 352,500  
William G. Kiesling
    100 %   $ 220,000  
 
For named executive officers other than Mr. Shea and Mr. Munyan, we divided the dollar amount available for option grants to each named executive officer by $32 per share, which was approximately equal to the trading price of CSS common stock at the beginning of April 2006, to determine the number of stock options granted to the executive officer, subject to rounding to the nearest 100 shares. On the last trading day prior to the date on which these options were granted, the closing price per share of our Common Stock, as reported on the New York Stock Exchange, was $30.73. If we had used $30.73 per share to calculate the number of options granted, the number of shares underlying each option would have been greater than the number of shares determined using $32 per share as the divisor for our calculation.
 
In the case of Mr. Shea, we reduced the number of shares underlying his option grant because we had granted options to purchase 8,000 shares of our Common Stock to him in October 2005 in connection with his promotion to the position of President of Berwick Offray. In the case of Mr. Munyan, we reduced the number of shares underlying his option grant because we had granted options to purchase 15,000 shares of our Common Stock to him in October 2005 in connection with his appointment as Chief Operating Officer of CSS, and because it was contemplated that an additional option grant would be made to Mr. Munyan in connection with his then-forthcoming assumption of responsibilities as our President and Chief Executive Officer.
 
We granted additional options to purchase 100,000 shares of our common stock to Mr. Munyan on May 12, 2006, the date on which Mr. Munyan entered into a letter agreement with us pertaining to his becoming our President and Chief Executive Officer.
 
The number of shares underlying stock options granted to the named executive officers are set forth below in the Grants of Plan-Based Awards table under the column heading, “All Other Option Awards: Number of Securities Underlying Options.” For additional information regarding stock option terms, see the narrative accompanying the Grants of Plan-Based Awards table. The amount shown in “Option Awards” column of the Summary Compensation Table reflects the dollar amount of stock option compensation expense recognized for financial statement purposes. Therefore, it includes amounts with respect to only a portion of the stock options granted during the fiscal year ended March 31, 2007, while also including amounts from earlier option grants. See the footnotes to the Summary Compensation Table for further information.


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