This excerpt taken from the SMG DEF 14A filed Dec 20, 2006.
Stock Option and Equity-Based Incentive Plans
For the 2006 fiscal year, the Committee targeted the long-term equity-based incentive awards for executive officers at the 50th percentile of total long-term equity-based incentive pay at Comparison Group companies. The Committee uses the Black-Scholes method to calculate the grant value of options, and uses the Comparison Group companies as a benchmark. The Committee adjusts grants of options and restricted stock from such targets for certain recipients based on individual performance. Stock options and restricted stock typically have a three-year cliff vesting provision based strictly on continued employment.