eTrade 2000 Annual Report Download - page 93

Retirement Plans
The Company has a 401(k) salary deferral program for eligible associates who have met certain service requirements. The Company
matches certain associate contributions; additional contributions to this plan are at the discretion of the Company. Total contribution
expense under this plan for the years ended September 30, 2000, 1999 and 1998 was $3.3 million, $1.6 million and $570,000,
respectively.
Employee Stock Ownership Plan
ETFC sponsored an Employee Stock Ownership Plan (“ESOP”). All employees of ETFC who met limited qualifications participated
in the ESOP. Under the ESOP, ETFC made contributions to a separate trust fund maintained exclusively for the benefit of those
employees who became participants. The ESOP previously borrowed from ETFC and used the proceeds to acquire common stock.
The ESOP shares initially were pledged as collateral for its debt to ETFC. As the debt is repaid, shares are released from collateral and
allocated to active employees, based on the proportion of debt service paid in the year. Accordingly, the shares pledged as collateral
are reported as unearned ESOP shares in the balance sheet. As shares are released from collateral, the Company reports compensation
expense equal to the current market price of the shares. As of September 30, 2000 and 1999, the ESOP owned 688,791 and 935,432
shares, respectively, of the Company’ s common stock, with approximately 614,722 and 501,438 shares allocated, respectively. As of
September 30, 2000 and 1999, the fair value of unearned
100
shares held by the ESOP was $3.6 million and $9.0 million, respectively. Compensation expense was $1.8 million, $3.3 million and
$391,000 for the years ended September 30, 2000, 1999 and 1998, respectively. Following the Company’ s acquisition of ETFC, no
new employees are eligible for participation in the ESOP.
Shareowner Notes Receivable
During fiscal 2000, the Company made full recourse loans to several of its executive officers in the aggregate principal and interest
amount of $19.1 million. The proceeds of these loans were used to fund the purchase of shares of E*TRADE common stock for the
exercise and hold of stock options. The loans accrue interest at the rate of 7.75% per annum. The principal amount and accrued
interest on the shareowners’ notes receivable are due through July 2001.
17. INCOME (LOSS) PER SHARE
The following table sets forth the computation of the numerator and denominator used in the computation of basic and diluted income
(loss) per share (in thousands):
2000 1999 1998
Basic Income Per
Share
Diluted Income Per
Share
Basic Loss Per
Share
Basic Loss Per
Share
Numerator:
Income (loss) before cumulative effect of accounting
change and extraordinary loss
$ 19,152 $ 19,152 $ (54,315 ) $ (402 )
Premium on redemption of trust preferred securities (1) — — (410 ) —
Preferred stock dividends — — (222 ) (2,352 )
Income (loss) before cumulative effect of accounting
change and extraordinary loss applicable to common
stock
19,152 19,152 (54,947 ) (2,754 )
Cumulative effect of accounting change, net of tax — — (469 ) —
Extraordinary loss on early extinguishment of
subordinated
debt, net of tax
— — (1,985 ) —
Income (loss) applicable to common stock $ 19,152 $ 19,152 $ (57,401 ) $ (2,754 )
Denominator:
Weighted average shares outstanding 301,926 301,926 272,832 195,051
Dilutive effect of options issued to associates — 16,330 — —
Dilutive effect of warrants outstanding — 1,080 — —
301,926 319,336 272,832 195,051
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2002. EDGAR Online, Inc.