Staples 2004 Annual Report Download - page 115

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STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
NOTE I Employee Benefit Plans (Continued)
February 1, 2005. In connection with the issuance of the restricted stock, Staples included $2.7 million in compensation
expense in each of fiscal years 2003 and 2002.
Performance Accelerated Restricted Stock (‘‘PARS’’)
PARS are shares of Staples common stock granted to employees and non-employee directors without cost to the
employee or director. The shares, however, are restricted in that they are not transferable (i.e., they may not be sold) by
the employee or director until they vest, generally after the end of five years. Such vesting date may accelerate if Staples
achieves certain compound annual earnings per share growth over a certain number of interim years. Subject to limited
exceptions, if the employee leaves Staples, or the director ceases to serve as a director of Staples, prior to the vesting date
for any reason, PARS will be forfeited by the employee or director and will be returned to Staples. Once PARS have
vested, they become unrestricted and may be transferred and sold. Based on the terms of these awards, the Company
accounts for PARS using fixed plan accounting and recognizes compensation expense over the expected life of the award
on a straight-line basis.
As of January 29, 2005, Staples had 721,000 and 742,000 PARS that were issued during fiscal years 2004 and 2003,
respectively. PARS issued in fiscal year 2004 have a weighted-average fair market value of $29.69 and initially vest in
March 2009 or will accelerate in March 2006, 2007 or 2008. PARS issued in fiscal year 2003 have a weighted-average fair
market value of $26.06 and will vest on April 1, 2005 as a result of Staples achieving its target earnings per share growth
for the fiscal year ended January 29, 2005. PARS issued in fiscal year 2000 have a weighted-average fair market value of
$14.19 and vested on February 1, 2005.
In connection with the issuance of PARS, Staples included $21.7 million, $15.1 million and $16.2 million in
compensation expense for fiscal years 2004, 2003 and 2002, respectively.
Employees’ 401(k) Savings Plan
Staples’ Employees’ 401(k) Savings Plan (the ‘‘401(k) Plan’’) is available to all United States based employees of
Staples who meet minimum age and length of service requirements. Company contributions are based upon a matching
formula applied to employee contributions that are made in the form of Company common stock and vest ratably over a
five year period. The Supplemental Executive Retirement Plan (the ‘‘SERP Plan’’), which is similar in many respects to
the 401(k) Plan, is available to certain Company executives and other highly compensated employees, whose contribu-
tions to the 401(k) Plan are limited, and allows such individuals to supplement their contributions to the 401(k) Plan by
making pre-tax contributions to the SERP Plan. Company contributions to the SERP Plan are based on a similar
matching formula and vesting period; however, beginning in October 2004, such contributions were made in cash rather
than in Company common stock.
In connection with these plans, Staples included approximately $13.6 million, $9.5 million and $7.2 million in
expense for fiscal years 2004, 2003 and 2002.
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