Long-term incentive plan compensation expense for 2005.
I might have made an interpretation error in my referenced post from last night based on the following statement from the latest 10K:.
…”We expect that the expenses associated with the performance-based cash incentive and RSUs will each increase between $4m to $5m in 2005 as we accrue expenses for both the final year of the initial measurement period and begin the first year of the first three year measurement period under our long term compensation programs”.
I did not see the word “each” last night, and originally interpreted that the recorded expense for the LTI compensation plan for 2005 would increase in total $4m to $5m over the LTI recorded expense of $7m for 2004 ($2.9m cash incentive + $4.1m RSU amortization). Therefore I assumed that the LTI expense would be between $11m to $12m for 2005 ($7m total for 2004 + $4m to 5m increase). This somewhat agreed to my original projection of a little over $10m for 2005 expense for the LTI plan
However I’m not sure if that is a correct interpretation, with the word “each”. Is this saying that both the cash-incentive part of the LTI and the RSU amortization part of the LTI will each increase $4m to $5m over 2004 amounts? If this interpretation is true, then the total LTI plan cost for 2005 will be between $15m to $17m. The cash portion of the incentive would be $6.9m to $7.9m ($2.9m in 2004 + $4m to $5m increase), and the RSU amortization portion would be $8.1m to $9.1m ($4.1m for 2004 + $4m to $5m increase). BTW Texb projected something like $15m LTI expense for 2005.
I’m still not sure if this is being interpreted correctly. To go from a $7m LTI plan expense in 2004 for 9 months to a$15m to $17m LTI plan expense in 2005 is too much IMO. Something doesn’t seem right. This is a new compensation plan btw, so its cost is all incremental additions to the operating expenses from what we had before the new compensation plan was implemented in April 2004..
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