NOTE D COMMON STOCK
There are 300,000,000 shares of common stock authorized at May 31, 2004 and 2003 with a par value of $0.01 per share. At May 31, 2004 and 2003, there were 116,122,000 and 115,496,000 shares outstanding, respectively, each of which is entitled to one vote.
Basic earnings per share are computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during each year. To compute diluted earnings per share, the weighted average number of shares of common stock outstanding during each year was increased by common stock options with exercisable prices lower than the average market prices of common stock during each year and reduced by the number of shares assumed to have been purchased with proceeds from the exercised options. Our convertible notes, while potentially dilutive, are not currently considered common stock equivalents.
Effective October 10, 2003, the RPM International Inc. 2003 Restricted Stock Plan for Directors (the “2003 Plan”) was approved by our stockholders. The Plan was established primarily for the purpose of recruiting and retaining directors, and to align the interests of directors with the interests of our stockholders. Only directors who are not employees of RPM International Inc. are eligible to participate. Under the 2003 Plan, up to 500,000 shares of RPM International Inc. common stock may be awarded. For the year ended May 31, 2004, 21,600 shares were granted, with 478,400 shares available for future grant. Unamortized deferred compensation expense relating to restricted stock grants for directors of $0.2 million at May 31, 2004 is being amortized over a three-year vesting period.
We have shares outstanding under two restricted stock plans for employees. Under the terms of the plans, up to 2,563,000 shares may be awarded to certain employees, generally subject to forfeiture until the completion of five or 10 years of service. For the year ended May 31, 2004, 49,500 shares were awarded under these plans. At May 31, 2004, 42,000 vested shares remained in these plans (26,000 at May 31, 2003). Unamortized deferred compensation expense of $4.7 million at May 31, 2004, relating to restricted stock grants for employees, is being amortized over the 10-year vesting period.
Total deferred compensation expense for the years ended May 31, 2004, 2003 and 2002 was $1.3 million, $2.1 million and $1.2 million, respectively.
Our Shareholder Rights Plan provides existing stockholders the right to purchase stock of RPM International Inc. at a discount in certain circumstances, as defined by the Plan. The rights are not exercisable at May 31, 2004 and expire in May 2009.
We have options outstanding under two stock option plans, the 1989 Stock Option Plan and the 1996 Key Employees Stock Option Plan, the latter of which provides for the granting of options for up to 9,000,000 shares. Stock options are granted to employees and directors at an exercise price equal to the fair market value of RPM International Inc. stock at the date of grant. These options are generally exercisable cumulatively, in equal annual installments commencing one year from the grant date, and have expiration dates ranging from October 2004 to October 2013. At May 31, 2004, 648,000 shares (1,902,000 at May 31, 2003) were available for future grant.
The following table summarizes option activity under the Plans during the last three fiscal years: