Dollar Tree 2006 Annual Report Download - page 46

grant, unless a higher price was 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. 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 in December 1998 and in accor-
dance 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 enter-
ing 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 vested over a
five-year period. As of February 3, 2007, 240,000 of
these options are still outstanding.
The 2003 Equity Incentive Plan (EIP) replaces the
Company’s SIP discussed above. Under the EIP, the
Company may grant up to 6.0 million 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 contrac-
tors. The EIP permits the Company to grant equity
awards in the form of stock options, stock apprecia-
tion 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
three-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 or RSUs awarded are subject
to certain general restrictions. The restricted stock
shares or units may not be sold, transferred, pledged
or disposed of until the restrictions on the shares or
units have lapsed or have been removed under the
provisions of the plan. In addition, if a holder of
restricted shares or units ceases to be employed by
the Company, any shares or units in which the restric-
tions have not lapsed will be forfeited.
The 2003 Non-Employee Director Stock Option
Plan (NEDP) provides non-qualified stock options to
non-employee members of the Company’s Board of
Directors. The stock options are functionally equiva-
lent to such options issued under the EIP discussed
above. 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 immediately.
The 2003 Director Deferred Compensation Plan
permits any of the Company’s directors who receive
a retainer or other fees for Board or Board committee
service to defer all or a portion of such fees until a
future date, at which time they may be paid in cash or
shares of the Company’s common stock, or to receive
all or a portion of such fees in non-statutory stock
options. Deferred fees that are paid out in cash will
earn interest at the 30-year Treasury Bond Rate. If a
director elects to be paid in common stock, the num-
ber of shares will be determined by dividing the
deferred fee amount by the current market price of a
share of the Company’s common stock. The number
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
44 DOLLAR TREE STORES, INC. • 2006 ANNUAL REPORT