OfficeMax 2007 Annual Report Download - page 86

not been restated to reflect the adoption of SFAS 123R. Under the modified prospective transition
method, the Company must record compensation expense for all awards granted after the adoption
date and for the unvested portion of previously granted awards that remain outstanding at the
adoption date, under the fair value method. Previously, the Company recognized compensation
expense for share-based awards to employees using the fair-value-based guidance in SFAS 123.
Due to the fact that the Company had previously accounted for share-based awards using
SFAS 123, the adoption of SFAS 123R did not have a material impact on the Company’s financial
position, results of operations or cash flows.
The Company sponsors several share-based compensation plans, which are described below.
Compensation costs related to the Company’s share-based plans were $26.9 million, $24.7 million
and $10.0 million for 2007, 2006 and 2005, respectively. Compensation expense is generally
recognized on a straight-line basis over the vesting period of grants. The total income tax benefit
recognized in the income statement for share-based compensation arrangements was $10.5 million,
$9.6 million and $3.9 million for 2007, 2006 and 2005, respectively.
2003 Director Stock Compensation Plan and OfficeMax Incentive and Performance Plan
In February 2003, the Company’s Board of Directors adopted the 2003 Director Stock
Compensation Plan (the ‘‘2003 DSCP’’) and the 2003 OfficeMax Incentive and Performance Plan
(the ‘‘2003 Plan’’), formerly named the 2003 Boise Incentive and Performance Plan, which were
approved by shareholders in April 2003.
A total of 57,187 shares of common stock are reserved for issuance under the 2003 DSCP.
Prior to December 8, 2005, the 2003 DSCP permitted non-employee directors to elect to receive
some or all of their annual retainer and meeting fees in the form of options to purchase shares of
the Company’s common stock. Non-employee directors who elected to receive a portion of their
compensation in the form of stock options did not receive cash for that portion of their
compensation. The difference between the $2.50-per-share exercise price of the options and the
market value of the common stock on the date of grant was equal to the cash compensation that
participating directors elected to forego and was recognized as compensation expense in the
Consolidated Statements of Income (Loss). On December 8, 2005, the Board of Directors amended
the 2003 DSCP to eliminate the choice to receive discounted stock options. All options granted
under the 2003 DSCP expire three years after the holder ceases to be a director.
The 2003 Plan was effective January 1, 2003, and replaced the Key Executive Performance
Plan for Executive Officers, Key Executive Performance Plan for Key Executives/Key Managers, 1984
Key Executive Stock Option Plan (‘‘KESOP’’), Key Executive Performance Unit Plan (‘‘KEPUP’’) and
Director Stock Option Plan (‘‘DSOP’’). No further grants or awards have been made under the Key
Executive Performance Plans, KESOP, KEPUP, or DSOP since 2003. A total of 5,193,025 shares of
common stock is reserved for issuance under the 2003 Plan. The Company’s executive officers, key
employees and nonemployee directors are eligible to receive awards under the 2003 Plan at the
discretion of the Executive Compensation Committee of the Board of Directors. Eight types of
awards may be granted under the 2003 Plan, including stock options, stock appreciation rights,
restricted stock, restricted stock units, performance units, performance shares, annual incentive
awards and stock bonus awards.
Restricted Stock and Restricted Stock Units
In 2007, the Company granted to employees and nonemployee directors 767,626 restricted
stock units (‘‘RSUs’’). The weighted-average grant-date fair value of the RSUs was $50.81. As of
December 29, 2007, 676,038 of these RSUs were unvested, and vest after defined service periods
as follows: 23,778 units in 2008, 326,130 in 2009 and 326,130 in 2010. The remaining
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