Office Depot 2007 Annual Report Download - page 67

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65
Restricted Stock and Performance-Based Grants
Our employee share-based awards are generally issued in the first quarter of the year. In 2007, we granted
approximately 0.7 million shares of time-based restricted stock to our employees. The weighted average fair value
of $32.46 for these awards was based on the grant date market price. As of December 29, 2007, none of these shares
had vested.
A summary of the status of the company’s nonvested shares as of December 29, 2007, and changes during the year
ended December 29, 2007 is presented below.
Nonvested Shares Shares
Weighted-Average
Grant-Date
Fair Value
Nonvested at beginning of year......................................... 1,675,130 $ 19.82
Granted.............................................................................. 670,013 32.46
Vested................................................................................ (1,367,070) 18.31
Forfeited............................................................................ (127,958) 30.06
Nonvested at end of year................................................... 850,115 $ 30.67
As of December 29, 2007, there was $17.7 million of total unrecognized compensation cost related to nonvested
restricted stock. That cost, net of forfeitures, is expected to be recognized over a weighted-average period of 1.9
years. We estimate that between 10%-15% of these shares will be forfeited. The total fair value of shares vested
during 2007 was approximately $25 million.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan, which was approved by Office Depot’s stockholders, permits eligible
employees to purchase our common stock at 85% of its fair market value. Following adoption of FAS 123R,
compensation expense is recognized for the difference between employee cost and fair value. Share needs associated
with this plan are satisfied through open market purchases.
Retirement Savings Plans
The Office Depot, Inc. Retirement Savings Plan (401(k) Plan), which was approved by the board of directors, allows
eligible employees to contribute a percentage of their salary, commissions and bonuses, up to $15,500 in 2007, to
the plan on a pretax basis in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The
401(k) Plan was amended effective January 1, 2005 to increase the maximum deferral percentage from 18% to 50%
of eligible compensation. Employer matching contributions are equivalent to 50% of the first 6% of an employee’s
contributions and are subject to the limits of the plan. The 401(k) Plan was amended effective July 1, 2005 to allow
employer matching contributions made on or after this date to be allocated and invested in the same manner as the
participants’ pre-tax contributions. Prior company matching contributions, which were held in Office Depot
Common Stock Fund, were allocated, in accordance with participant’s elections, into other investment alternatives.
The plan also allows for a discretionary matching contribution in addition to the normal match if approved by the
board of directors. Office Depot also sponsors the Office Depot, Inc. Non-Qualified Deferred Compensation Plan
that permits eligible highly compensated employees, who are limited in the amount they can contribute to the 401(k)
Plan, to alternatively defer a portion of their salary, commissions and bonuses up to maximums specified in this
plan. Employer matching contributions to the Deferred Compensation Plan are allocated to investment alternatives
selected by the participants. During 2007, 2006, and 2005, $12.0 million, $14.1 million and $10.7 million,
respectively, was recorded as compensation expense for company contributions to these programs.
Pension Plans
During 2007, we maintained defined benefit pension plans that cover a limited number of employees in Europe.
During 2006, plan arrangements were restructured for one plan such that the primary responsibility for the related
pension benefit obligation has been transferred to an unrelated third party and that plan is settled. The following
table provides a reconciliation of changes in the projected benefit obligation, the fair value of plan assets and the
funded status of our foreign defined benefit pension plans with the amounts recognized on our balance sheets: