FORM 10-K/A GAMCO Investors, Inc. - Gabelli

The notes pay interest quarterly at a rate of 5.22% per year, which rate was reset on November 17, 2004. Each purchase contract obligated its holder to purchase, on February
17, 2005, newly issued shares of our class A common stock. During December 2004, a holder of 469,600 purchase contracts purchased 252,456 shares of our class A common
stock through early settlement. In February 2005, the remaining holders of the 2,822,700 purchase contracts purchased 1,517,483 shares of our class A common stock for
$70,569,000.
In May 2002, the Board of Directors approved the repurchase of up to 200,000 shares of the mandatory convertible securities from time to time in the open market. On August 9,
2002, the Board of Directors increased the number of shares authorized to be repurchased by an additional 200,000 and in May 2004, the Board of Directors increased the
number of shares authorized to be repurchased by an additional 200,000. In August 2004, the Board of Directors changed the authorization to $25 million. Through December
31, 2004, we repurchased 307,700 shares at an average price of $22.54 per share and an aggregate cost of $6.9 million. In 2004, a gain of approximately $34,000, attributable to
the extinguishment of the debt component of each mandatory convertible security repurchased, was included in net gain from investments. There were no repurchases during 2005
and 2006. Refer also to Note P.
F. Stockholders' Equity
Stock Award and Incentive Plan
We maintain two Stock Award and Incentive Plans (the “Plans”), approved by the shareholders, which are designed to provide incentives which will attract and retain individuals
key to the success of GBL through direct or indirect ownership of our common stock. Benefits under the Plans may be granted in any one or a combination of stock options, stock
appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents and other stock or cash based awards. A maximum of 1,500,000 shares of class A
common stock have been reserved for issuance under each of the Plans by a committee of the Board of Directors responsible for administering the Plans. Under the Plans, the
committee may grant either incentive or nonqualified stock options with a term not to exceed ten years from the grant date and at an exercise price that the committee may
determine. Options granted under the Plans vest 75% after three years and 100% after four years from the date of grant and expire after ten years.
Voting Rights
The holders of class A common stock and class B common stock have identical rights except that (i) holders of class A common stock are entitled to one vote per share, while
holders of class B common stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (ii) holders of class A common stock are not
eligible to vote on matters relating exclusively to class B common stock and vice versa.
A summary of the stock option activity for the years ended December 31, 2005 and 2006 is as follows:
Shares
Weighted Average
Exercise Price
Outstanding, December 31, 2004 799,325 $ 27.34
Granted 20,000 $ 44.90
Forfeited (21,500) $ 28.95
Tendered (522,000) $ 26.68
Exercised (49,500) $ 26.77
Outstanding, December 31, 2005 226,325 $ 30.38
Granted 10,000 $ 39.55
Forfeited (10,000) $ 44.90
Exercised (33,250) $ 20.75
Outstanding, December 31, 2006 193,075 $ 31.77
Shares available for future issuance
at December 31, 2006 1,244,775
At December 31, 2005 and 2006, there were exercisable outstanding stock options of 206,325 and 173,075 respectively. The weighted average exercise price of the exercisable
outstanding stock options at December 31, 2005 and 2006 was $28.98 per share and $30.56 per share, respectively.
F-22