Dollar Tree 2007 Annual Report Download - page 46

44 DOLLAR TREE, INC. • 2007 ANNUAL REPORT
Notes to Consolidated Financial Statements continued
to January 1, 2007 vest in the Company’s profit shar-
ing contributions based on the following schedule:
• 25% after three years of service
• 50% after four years of service
• 100% after five years of service
All eligible employees are immediately vested in
any Company match contributions under the 401(k)
portion of the plan.
Deferred Compensation Plan
The Company has a deferred compensation plan
which provides certain officers and executives the
ability to defer a portion of their base compensation
and bonuses and invest their deferred amounts. The
plan is a nonqualified plan and the Company may
make discretionary contributions. The deferred
amounts and earnings thereon are payable to partici-
pants, or designated beneficiaries, at specified future
dates, or upon retirement or death. Total cumulative
participant deferrals were approximately $2.5 million
and $2.3 million, respectively, at February 2, 2008 and
February 3, 2007, and are included in “other liabilities”
on the accompanying consolidated balance sheets. The
related assets are included in “other assets, net” on the
accompanying consolidated balance sheets. The
Company did not make any discretionary contribu-
tions in the years ended February 2, 2008, February 3,
2007 or January 28, 2006.
All of the employee benefit plans noted above
were adopted by Dollar Tree, Inc. on March 2, 2008
as a part of the holding company reorganization.
Refer to Note 1 for a discussion of the holding
company reorganization.
NOTE 9 - STOCK-BASED COMPENSATION PLANS
At February 2, 2008, the Company has eight stock-
based compensation plans. Each plan and the account-
ing 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 granted options to its employees for the
purchase of up to 12.6 million shares of Common
Stock. The exercise price of each option equaled the
market price of the Company’s stock at the date of
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 termi-
nated 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 entering into
non-competition agreements and a consulting agree-
ment. 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 2, 2008, 135,250 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 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