Foot Locker 2007 Annual Report Download - page 73

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In late January 2008, the Company modified the actual asset allocations for its Canadian pension plan. Effective
with the beginning of 2008, the target allocation for the Canadian plan is 95 percent debt securities and 5 percent
equity. The bond portfolio is comprised of government and corporate bonds chosen to match the pension plan’s
benefit payment obligations. This change will reduce future volatility with regard to the funded status of the plan.
This change will, however, result in higher pension expense due to the lower long-term rate of return associated with
debt securities. In 2008, the Company is required to make a contribution of approximately $6 million to its Canadian
pension plan.
Estimated future benefit payments for each of the next five years and the five years thereafter are as follows:
Pension Benefits Postretirement Benefits
(in millions)
2008 .......................................... $ 64 $2
2009 .......................................... 64 2
2010 .......................................... 60 2
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 1
2012 .......................................... 57 1
2013–2017 .......................................... 255 4
In February 2007, the Company and its U.S. pension plan, the Foot Locker Retirement Plan, were named as
defendants in a class action in federal court in New York. The Complaint alleged that the 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 is defending 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 was $1.8 million, $1.9 million, and $1.6 million in 2007, 2006 and
2005, respectively.
23. Share-Based Compensation
Stock Options
On May 30, 2007, the Company’s shareholders approved the Company’s 2007 Stock Incentive Plan (the “2007 Stock
Plan”). Upon approval of the 2007 Stock Plan, the Company stated it would no longer make stock awards under the 2003
Stock Option and Award Plan (the “2003 Stock Option Plan”), the 1998 Stock Option and Award Plan (the “1998 Plan”),
and the 2002 Foot Locker Directors’ Stock Plan (the “2002 Directors’ Plan”), although awards previously made under
those plans and outstanding on May 30, 2007 continue in effect governed by the provisions of those plans.
Under the 2007 Stock Plan, stock options, restricted stock, stock appreciation rights (SARs), or other stock-based
awards may be granted to officers and other employees of the Company, including our subsidiaries and operating
divisions worldwide. Nonemployee directors are also eligible to receive awards under this plan. Options for employees
become exercisable in substantially equal annual installments over a three-year period, beginning with the first
anniversary of the date of grant of the option, unless a shorter or longer duration is established at the time of the
option grant. Options for nonemployee directors become exercisable one year from the date of grant. The maximum
number of shares of stock reserved for all awards under the 2007 Stock Plan is 6,000,000. The number of shares reserved
for issuance as restricted stock and other stock-based awards cannot exceed 1,500,000 shares. The options terminate
up to ten years from the date of grant.