Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/16/2016
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H. Share-Based Awards, Purchase Plans and Compensation Cost

Stock Option and Award Plan. The Company has a stock incentive plan under which it grants stock options and share awards to directors, officers and other employees. Option price is the market price on the date of grant. Options become exercisable at such time, generally over three or four years, and in such installments as set by the Company, and expire ten years from the date of grant.

Restricted share awards have been made to certain key employees under the plan. The market value of restricted stock at the date of grant is charged to operations over the vesting period. Compensation cost charged to operations for restricted share awards was $0.1 million in 2015, $0.3 million in 2014 and $0.5 million in 2013. Individual nonemployee directors of the Company may elect to receive, either currently or deferred, all or part of their annual retainer, and/or payment for attendance at Board or Committee meetings, in the form of shares of the Company’s common stock instead of cash. Under this arrangement, the Company issued 5,963 shares in 2015, 4,867 shares in 2014 and 6,079 shares in 2013. The expense related to this arrangement is not significant. The Company has a stock appreciation plan that provides for payments of cash to eligible foreign employees based on the change in the market price of the Company’s common stock over a period of time. Compensation cost related to this plan was $0.1 million in 2015, $1.0 million in 2014 and $1.9 million in 2013.

Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
 
Option
Shares
 
Weighted
Average
Exercise
Price
 
Options
Exercisable
 
Weighted
Average
Exercise
Price
Outstanding, December 28, 2012
5,192

 
$
34.85

 
3,194

 
$
32.99

Granted
969

 
65.97

 
 
 
 
Exercised
(990
)
 
33.04

 
 
 
 
Canceled
(22
)
 
40.71

 
 
 
 
Outstanding, December 27, 2013
5,149

 
41.03

 
3,311

 
33.20

Granted
475

 
74.62

 
 
 
 
Exercised
(607
)
 
35.73

 
 
 
 
Canceled
(42
)
 
61.35

 
 
 
 
Outstanding, December 26, 2014
4,975

 
44.72

 
3,318

 
34.86

Granted
543

 
74.19

 
 
 
 
Exercised
(328
)
 
37.28

 
 
 
 
Canceled
(25
)
 
72.01

 
 
 
 
Outstanding, December 25, 2015
5,165

 
$
48.16

 
3,583

 
$
38.49


The following table summarizes information for options outstanding and exercisable at December 25, 2015 (in thousands, except exercise prices and contractual term amounts):
  Range of  
Prices
 
Options
Outstanding
 
Options
Outstanding
Weighted Avg.
Remaining
Contractual Term
in Years
 
Options
Outstanding
Weighted Avg.
Exercise Price
 
Options
Exercisable
 
Options
Exercisable
Weighted Avg.
Exercise Price
$  16-30
 
1,278

 
4
 
$
23.56

 
1,278

 
$
23.56

$  30-45
 
1,357

 
3
 
39.24

 
1,342

 
39.20

$  45-60
 
1,147

 
6
 
54.02

 
772

 
53.03

$  60-77
 
1,383

 
8
 
74.80

 
191

 
74.72

$  16-77
 
5,165

 
5
 
$
48.16

 
3,583

 
$
38.49


The aggregate intrinsic value of exercisable option shares was $124.9 million as of December 25, 2015, with a weighted average contractual term of 4.3 years. There were approximately 5.1 million vested share options and share options expected to vest as of December 25, 2015, with an aggregate intrinsic value of $131.8 million, a weighted average exercise price of $48.03 and a weighted average contractual term of 5.4 years.


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