OfficeMax 2007 Annual Report Download - page 88

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(‘‘KESOP’’), the Director Stock Option Plan (‘‘DSOP’’) and the Director Stock Compensation Plan
(‘‘DSCP’’). No further grants will be made under the KESOP, DSOP and DSCP.
The KESOP provided for the grant of options to purchase shares of common stock to key
employees of the Company. The exercise price of awards under the KESOP was equal to the fair
market value of the Company’s common stock on the date the options were granted. Options
granted under the KESOP expire, at the latest, ten years and one day following the grant date.
The DSOP, which was available only to nonemployee directors, provided for annual grants of
options. The exercise price of awards under the DSOP was equal to the fair market value of the
Company’s common stock on the date the options were granted. The options granted under the
DSOP expire upon the earlier of three years after the director ceases to be a director or ten years
after the grant date.
The DSCP permitted nonemployee directors to elect to receive grants of options to purchase
shares of the Company’s common stock in lieu of cash compensation. The difference between the
$2.50-per-share exercise price of DSCP options and the market value of the common stock subject
to the options was intended to offset the cash compensation that participating directors elected not
to receive. Options granted under the DSCP expire three years after the holder ceases to be a
director.
Under the KESOP and DSOP, options may not, except under unusual circumstances, be
exercised until one year following the grant date. Under the DSCP, options may be exercised six
months after the grant date.
A summary of stock option activity for the years ended December 29, 2007, December 30,
2006 and December 31, 2005 is presented in the table below:
2007 2006 2005
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
Balance at beginning of year . 1,753,188 $31.81 5,759,545 $32.39 6,963,462 $32.62
Options granted .......... 35,000 31.39 — — 310,200 32.38
Options exercised ......... (187,843) 31.49 (3,993,857) 32.62 (883,817) 28.00
Options forfeited and expired . (4,050) 32.88 (12,500) 37.57 (630,300) 41.20
Balance at end of year ..... 1,596,295 $31.84 1,753,188 $31.81 5,759,545 $32.39
Exercisable at end of year . . . 1,409,896 1,522,390 5,449,345
Weighted average fair value of
options granted (Black-
Scholes) .............. $ 7.95 — $ 7.21
The following table provides summarized information about stock options outstanding at
December 29, 2007:
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Average Average Average
Options Contractual Exercise Options Exercise
Range of Exercise Prices Outstanding Life (Years) Price Exercisable Price
$2.50 .................. 11,171 — $ 2.50 11,171 $ 2.50
$18.00 – $28.00 .......... 569,664 2.6 27.65 569,664 27.65
$28.01 – $39.00 .......... 1,015,460 4.1 34.50 829,061 35.01
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