Office Depot 2010 Annual Report Download - page 58

Restricted Stock
Restricted stock grants typically vest annually over a three-year service period, however, grants made to the
company’s board of directors vest immediately and are free of restrictions. In 2010, we granted 173,387 shares of
restricted stock with a weighted average fair value of $8.01 based on the grant date market price. As of
December 25, 2010, all of the shares granted in 2010 had vested. In 2009, we granted approximately 22,000
shares of restricted stock with a weighted average fair value of $0.85 based on the grant date market price. In
2008, we granted to employees approximately 2.7 million shares of time-based restricted stock with annual
vesting over a three-year service period valued at the grant date market price of $11.24 per share. A summary of
the status of the company’s nonvested shares as of December 25, 2010, and changes during the year ended
December 25, 2010 is presented below.
2010 2009 2008
Shares
Weighted
Average
Grant-Date
Price Shares
Weighted
Average
Grant-Date
Price Shares
Weighted
Average
Grant-Date
Price
Nonvested at beginning of year ..... 1,318,162 $13.21 2,663,216 $14.06 850,115 $30.67
Granted ....................... 173,387 8.01 21,628 0.85 2,651,737 11.24
Vested ........................ (741,007) 14.19 (1,230,397) 14.60 (543,068) 24.22
Forfeited ...................... (254,483) 11.31 (136,285) 15.24 (295,568) 17.81
Nonvested at end of year .......... 496,059 $10.39 1,318,162 $13.21 2,663,216 $14.06
As of December 25, 2010, there was approximately $1 million of total unrecognized compensation cost related to
nonvested restricted stock. The remaining 0.5 million nonnvested awards represent the last vesting tranche of our
2008 annual restricted stock grant. The $1 million unrecognized compensation cost, net of forfeitures, is expected
to be recognized over a period of 2 months in 2011. The company expects the forfeiture rate of these remaining
awards to be minimal. The total grant date fair value of shares vested during 2010 was approximately $11
million.
Retirement Savings Plans
Eligible company employees may participate in the Office Depot, Inc. Retirement Savings Plan (401(k) Plan),
which was approved by the board of directors. This plan allows those employees to contribute a percentage of
their salary, commissions and bonuses in accordance with plan limitations and provisions of Section 401(k) of
the Internal Revenue Code. Prior to the end of 2008, employer matching contributions were equivalent to 50% of
the first 6% of an employee’s contributions, subject to the limits of the plan. Company matching contributions
were suspended by the compensation and benefits committee of the board of directors during 2009 and 2010. The
committee reinstated the company matching provisions at 50% of the first 4% of an employee’s contributions,
subject to the limits of the plan, effective with the first pay period beginning in 2011. Matching contributions are
invested in the same manner as the participants’ pre-tax contributions. The plan also allows for a discretionary
matching contribution in addition to the normal match contributions if approved by the board of directors.
Office Depot also sponsors the Office Depot, Inc. Non-Qualified Deferred Compensation Plan that, until
December 2009, permitted eligible highly compensated employees, who were limited in the amount they could
contribute to the 401(k) Plan, to alternatively defer a portion of their salary, commissions and bonuses up to
maximums and under restrictive conditions specified in this plan and to participate in company matching
provisions. The matching contributions to the deferred compensation plan were allocated to hypothetical
investment alternatives selected by the participants. The compensation and benefits committee of the board of
directors amended the plan to eliminate the predetermined matching contributions effective with the first payroll
period beginning in 2009. Prior to the end of 2008, all deferred compensation plan participants were given the
opportunity to take advantage of the transition election rules provided under the final 409A regulations of the
57