Dollar Tree 2004 Annual Report Download - page 48

44 DOLLAR TREE STORES, INC. • 2004 ANNUAL REPORT
The Company made no discretionary contributions in the
years ended January 29, 2005 and January 31, 2004, the
month ended February 1, 2003 or in the year ended
December 31, 2002.
NOTE 9 – STOCK-BASED
COMPENSATION PLANS
At January 29, 2005, the Company has eight stock-based
compensation plans. Each plan and the accounting
method are described below.
Fixed Stock-Option Compensation Plans
Under the Non-Qualified Stock Option Plan (SOP), the
Company granted options to its employees for 1,047,264
shares of Common Stock in 1993 and 1,048,289 shares
in 1994. Options granted under the SOP have an exercise
price of $0.86 and are fully vested at the date of grant.
Under the 1995 Stock Incentive Plan (SIP), the
Company may grant options to its employees for up to
12,600,000 shares of Common Stock. The exercise price
of each option equals the market price of the Company’s
stock at the date of grant, unless a higher price is
established by the Board of Directors, and an option’s
maximum term is 10 years. Options granted under the
SIP generally vested over a three-year period. In
exchange for their options to purchase Dollar Express
Common Stock, certain employees of Dollar Express
were granted 228,072 options to purchase the Company’s
common stock based on an exchange ratio of 0.8772.
Options issued in connection with the merger were
fully vested as of the date of the merger. This plan
was terminated on July 1, 2003 and replaced with the
Company’s 2003 Equity Incentive Plan, discussed below.
The Step Ahead Investments, Inc. Long-Term
Incentive Plan (SAI Plan) provided for the issuance of
stock options, stock appreciation rights, phantom stock
and restricted stock awards to officers and key employees.
Effective with the merger with 98 Cent Clearance
Center and in accordance with the terms of the SAI
Plan, outstanding 98 Cent Clearance Center options
were assumed by the Company and converted, based on
1.6818 Company options for each 98 Cent Clearance
Center option, to options to purchase the Company’s
common stock. Options issued as a result of this
conversion were fully vested as of the date of the merger.
Under the 1998 Special Stock Option Plan (Special
Plan), options to purchase 247,500 shares were granted to
five former officers of 98 Cent Clearance Center who
were serving as employees or consultants of the Company
following the merger. The options were granted as
consideration for entering into non-competition
agreements and a consulting agreement. The exercise
price of each option equals the market price of the
Company’s stock at the date of grant, and the options’
maximum term is 10 years. Options granted under the
Special Plan vest over a five-year period.
The 2003 Equity Incentive Plan (EIP) replaces the
Company’s SIP discussed above. Under the EIP, the
Company may grant up to 6,000,000 shares of its
Common Stock, plus any shares available for future
awards under the SIP, to the Company’s employees,
including executive officers and independent contractors.
The EIP permits the Company to grant equity awards in
the form of stock options, stock appreciation rights and
restricted stock. The exercise price of each stock option
granted equals the market price of the Company’s stock
at the date of grant. The options generally vest over a
three-year period and have a maximum term of 10 years.
The 2004 Executive Officer Equity Plan (EOEP) is
available only to the Chief Executive Officer and certain
other executive officers. These officers no longer receive
awards under the EIP. The EOEP allows the Company
to grant the same type of equity awards as does the EIP.
These awards generally vest over a five-year period, with
a maximum term of 10 years.
Stock appreciation rights may be awarded alone or in
tandem with stock options. When the stock appreciation
rights are exercisable, the holder may surrender all or a
portion of the unexercised stock appreciation right and
receive in exchange an amount equal to the excess of
the fair market value at the date of exercise over the fair
market value at the date of the grant. No stock
appreciation rights have been granted to date.
Any restricted stock awarded is subject to certain
general restrictions. The restricted stock shares may not
be sold, transferred, pledged or disposed of until the
restrictions on the shares have lapsed or have been
removed under the provisions of the plan. In addition, if
a holder of the restricted shares ceases to be employed by
the Company, any shares in which the restrictions have
not lapsed will be forfeited.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)