Foot Locker 2006 Annual Report Download - page 72

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Company’s pension plan violated the Employee Retirement Income Security Act of 1974, including, without limitation,
its age discrimination and notice provisions, as a result of the Company’s conversion of its defined benefit plan to a
defined benefit pension plan with a cash balance feature in 1996. The Company plans to defend the action vigorously.
Savings Plans
The Company has two qualified savings plans, a 401(k) Plan that is available to employees whose primary place of
employment is the U.S., and an 1165 (e) Plan, which began during 2004 that is available to employees whose primary
place of employment is in Puerto Rico. Both plans require that the employees have attained at least the age of twenty-
one and have completed one year of service consisting of at least 1,000 hours. The savings plans allow eligible employees
to contribute up to 25 percent and 10 percent, for the U.S. and Puerto Rico plans, respectively, of their compensation on
a pre-tax basis. The Company matches 25 percent of the first 4 percent of the employees’ contributions with Company
stock and such matching Company contributions are vested incrementally over 5 years for both plans. The charge to
operations for the Company’s matching contribution for the U.S. plan was $1.9 million, $1.6 million, and $1.3 million in
2006, 2005 and 2004, respectively.
22 Share-Based Compensation
Stock Options
Under the 2003 Stock Option and Award Plan (the “2003 Stock Option Plan”), options, restricted stock, stock
appreciation rights (SARs), or other stock-based awards may be granted to officers and other employees, including those
at the subsidiary levels, at not less than the market price on the date of the grant. Unless a longer or shorter period is
established at the time of the option grant, generally, one-third of each stock option grant becomes exercisable on each
of the first three anniversary dates of the date of grant. The maximum number of shares of stock reserved for issuance
pursuant to the 2003 Stock Option Plan is 4,000,000 shares. The number of shares reserved for issuance as restricted
stock and other stock-based awards cannot exceed 1,000,000 shares. The options terminate up to 10 years from the
date of grant.
Under the Company’s 1998 Stock Option and Award Plan (the “1998 Plan”), options to purchase shares of common
stock may be granted to officers and other employees at not less than the market price on the date of grant. Under the
plan, the Company may grant to officers and other employees, including those at the subsidiary level, stock options,
SARs, restricted stock or other stock-based awards. Generally, one-third of each stock option grant becomes exercisable
on each of the first three anniversary dates of the date of grant. The options terminate up to 10 years from the date of
grant. In 2000, the Company amended the 1998 Plan to provide for awards of up to 12,000,000 shares of the Company’s
common stock. The number of shares reserved for issuance as restricted stock and other stock-based awards, as amended,
cannot exceed 3,000,000 shares.
In addition, options to purchase shares of common stock remain outstanding under the Company’s 1995 Stock
Option and Award Plan (the “1995 Plan”). The 1995 Plan is substantially the same as the 1998 Plan. The number of
shares authorized for awards under the 1995 Plan is 6,000,000 shares. The number of shares reserved for issuance as
restricted stock under the 1995 Plan was 1,500,000 shares. As of March 8, 2005 no further awards may be made under the
1995 Plan. Options granted under the 1986 Stock Option Plan generally became exercisable in two equal installments
on the first and the second anniversaries of the date of grant, no further options may be granted under this Plan.
The 2002 Foot Locker Directors’ Stock Plan (the “2002 Directors Plan”) replaced both the Directors’ Stock Plan,
which was adopted in 1996, and the Directors’ Stock Option Plan, which was adopted in 2000. There are 500,000
shares authorized under the 2002 Directors Plan. No further grants or awards may be made under either of the prior
plans. Options granted prior to 2003 have a three-year vesting schedule. Options granted beginning in 2003 become
exercisable one year from the date of grant.
Employee Stock Purchase Plan
The Company’s 2003 Employees Stock Purchase Plan (the “2003 Employee Stock Purchase Plan”) terms are
substantially the same as the 1994 Employees Stock Purchase Plan (the “1994 Employee Stock Purchase Plan”), which
expired in June 2004. Under the Company’s 2003 Employee Stock Purchase Plan participating employees are able to
contribute up to 10 percent of their annual compensation through payroll deductions to acquire shares of the Company’s