Foot Locker 2005 Annual Report Download - page 129

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Value’’ of the Common Stock on the date of payment, as defined in the Long-Term Plan, is the average
of the daily closing prices of a share of the Company’s Common Stock in the 60-day period immediately
preceding the payment date.
Payment for a Performance Period to a Covered Employee cannot be in an amount that exceeds
the lesser of (i) 300% of that employee’s Annual Base Salary or (ii) $5,000,000. Awards of Common
Stock made pursuant to the Long-Term Plan are Other Stock-Based Awards, and are issued under, and
subject to, the provisions of the Company’s Stock Option and Award Plans.
Amendment or Termination of Plan. The Committee may amend, suspend, or terminate the Long-
Term Plan in whole or in part; provided, however, that no amendment that requires shareholder
approval in order for the plan to continue to comply with Section 162(m) of the Internal Revenue Code
will be effective unless it is approved by the required vote of the shareholders of the Company. In
addition, no amendment may adversely affect the rights of any participant without the participant’s
consent under any Long-Term Plan awards previously granted.
Benefits Not Determinable. Any payout under the Long-Term Plan is calculated based upon Foot
Locker’s performance in the applicable Performance Period and is measured against the performance
criteria set at the beginning of the applicable Performance Period by the Compensation and
Management Resources Committee. Since performance goal criteria may vary from year to year,
benefits under the Long-Term Plan are not determinable. The Long-Term Plan is designed to provide
payments only if the performance goals established by the Committee have been met and the
attainment of such performance goals has been certified by the Committee. The Summary
Compensation Table on Page 16 states the payouts under the Long-Term Plan to the named executive
officers for the 2001-2003, 2002-2004, and 2003-2005 Performance Periods.
Reapproval of Performance Goals
The Long-Term Plan provides that the Compensation and Management Resources Committee
generally has the authority to determine the performance goals that will be in effect for a Performance
Period. The Committee also has the authority to the extent permitted by Section 162(m) of the Internal
Revenue Code (if applicable) to incorporate provisions in the performance goals allowing for
adjustments in recognition of unusual or non-recurring events affecting the Company or our financial
statements or in response to changes in applicable laws, regulations or accounting principles.
The performance goals for the Covered Employees will be determined by the Compensation and
Management Resources Committee based on one or more of the following criteria:
•the attainment of certain target levels of, or percentage increase in, Consolidated Net Income, or
•the attainment of certain target levels of, or a specified increase in, return on invested capital.
We are seeking shareholder approval of these performance goals originally approved by
shareholders in 1996 and reapproved by shareholders in 2001.
The Board of Directors recommends a vote FOR Proposal 3.
37