Dollar Tree 2010 Annual Report Download - page 46

Notes to Consolidated Financial Statements
NOTE 9—STOCK-BASED COMPENSATION
PLANS
At January 29, 2011, 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-Qualifi ed Stock Option Plan (SOP),
the Company granted options to its employees for
1,570,896 shares of Common Stock in 1993 and
1,572,434 shares in 1994. Options granted under the
SOP have an exercise price of $0.57 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 18.9 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 gener-
ally vested over a three-year period. This plan was
terminated on July 1, 2003 and replaced with the
Company’s 2003 Equity Incentive Plan (EIP).
Under the EIP, the Company may grant up to
9.0 million shares of its Common Stock, plus any
shares available for future awards under the SIP, to the
Company’s employees, including executive offi cers
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 Executive Offi cer Equity Incentive Plan
(EOEP) is available only to the Chief Executive
Offi cer and certain other executive offi cers. These
offi cers 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 provi-
sions 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 restrictions have not
lapsed will be forfeited.
The 2003 Non-Employee Director Stock Option
Plan (NEDP) provides non-qualifi ed 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 closing market price of the Company’s
stock on 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 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
number of shares will be determined by dividing the
deferred fee amount by the closing market price of a
share of the Company’s common stock on the date of
deferral. The number of options issued to a director
will equal the deferred fee amount divided by 33% of
the price of a share of the Company’s common stock.
The exercise price will equal the fair market value of
the Company’s common stock at the date the option
is issued. The options are fully vested when issued and
have a term of 10 years.
44 DOLLAR TREE, INC. ♦ 2010 Annual Report