eTrade 2001 Annual Report Download - page 142

Table of Contents
shown as a deduction from shareowners’ equity in the consolidated balance sheets and are reflected as shareowners notes
receivable.
(3) During fiscal year 2000, the Company adopted a home loan/home lease plan to assist executives relocating to the Silicon Valley
from other areas of the country. Under this program, the Company made loans to certain executives for the sole purpose of
purchasing a home in the Silicon Valley and the Company leased properties to certain other executives. All loans were made at
the applicable federal interest rate and all leases were at fair market value.
(4) This loan was made pursuant to the Company’ s home loan/home lease program discussed above. It was repaid in full in March
2002.
(5) This loan was made pursuant to the Company’ s home loan/home lease program discussed above. This loan was due in December
2002. The loan was satisfied when the former executive returned restricted stock to the Company and agreed to forego other
consideration otherwise due to him.
(6) This loan was made pursuant to the Company’ s home loan/home lease program discussed above. This loan was due in December
2002. The loan was partially satisfied ($2.9 million) in cash and the remainder was satisfied in exchange for release of obligations
owing to the former executive.
During fiscal 2001 and fiscal 2000, a wholly-owned subsidiary of the Company purchased a total of four residential properties that it
leases to certain of its executive officers with options to buy. The Company recorded rental income of $152,000 for the fiscal year
ended December 31, 2001, $40,000 for the three months ended December 31, 2000 and $12,000 for the fiscal year ended September
30, 2000 related to these properties. Rental income is recorded in other income. During 2001, the Company sold one of these
properties, incurring a loss of $2.9 million. The Company is currently in contract to sell two of the remaining properties and has
recorded a $1.0 million loss based on the contract price. In the event that these contracts are closed, the realized loss will be
approximately $0.3 million on one property and approximately $0.7 million on the other property, which had been purchased in fiscal
2000 from an entity controlled by the Chairman and CEO; however, although under no legal or contractual obligation to do so, that
entity has agreed to pay to the Company an amount equal to the full market loss on the property.
The Company has entered into management retention agreements and/or employment agreements with its key executive officers. These
agreements provide for annual base salary compensation, as well as stock option acceleration, loan forgiveness, tax reimbursements,
and severance payments in the event of termination of employment under defined circumstances within 18 months following a change
in the Company’ s control, or in some circumstances, solely in the event of termination. Base salaries are subject to adjustments
according to the individual’ s and the Company’ s financial performance.
In the normal course of business, E*TRADE has transactions with companies that are considered related parties. As of December 31,
2001, SOFTBANK Corporation held more than 10% of the Company’ s outstanding common stock and has a representative on the
Company’ s Board of Directors. SOFTBANK is the majority owner of E*TRADE Japan and is an investor in venture capital funds
sponsored by the Company, as more fully described in Note 8. The Company repurchased stock from SOFTBANK during the year at a
discount from market price, as more fully disclosed in Note 18. A member of the Company’ s Board of Directors is an executive officer
of Fox Entertainment Group and the Company’ s Chairman and CEO is on Fox’ s Board of Directors. The Company purchased
advertising services from Fox of $1.6 million in fiscal year 2001, $9.8 million in the three months ended December 31, 2000, $11.4
million in fiscal year 2000 and $14.3 million in fiscal year 1999. These services were purchased through third-party advertising
agencies.
2002. EDGAR Online, Inc.