Office Depot 2003 Annual Report Download - page 90

Office Depot 2003 / Proxy Statement 88
Long-Term Incentive Plans—Awards In Last Fiscal Year
Estimated Future Payouts
Under Plan (In Numbers of Shares)(1)
Performance or
Number of Other Period
Shares, Units or Until Maturation Threshold Target Maximum
Name Other Rights or Payout (# of Shares) ( # of Shares) ( # of Shares)
Nelson 35,000 3 years 17,500 35,000 52,500
Colley 18,000 3 Years 9,000 18,000 27,000
Van Kaldekerken 15,000 3 Years 7,500 15,000 22,500
Brown 15,000 3 Years 7,500 15,000 22,500
Fannin 12,000 3 Years 6,000 12,000 18,000
(1) All awards are pursuant to the Company’s Performance Shares Plan (the “ Plan”), approved by the Shareholders at the 2002
Annual Meeting. Pursuant to this Plan, select managers are awarded units in the Plan, which provides for an award of a spec-
ified number of shares of the Company’s stock provided that our Company meets or exceeds certain performance criteria
established by our Compensation Committee. If the Company fails to meet the specified criteria, participants may receive as
little as zero shares, or if it substantially exceeds those criteria, up to 150% of the base award amount. Each such Plan is a
closed plan, established at the beginning of a three-year performance cycle and ending at the end of such three-year per-
formance cycle. Each year, our Compensation Committee considers whether to establish such a Plan, the participants in the
Plan and the measurement criteria to be utilized to determine awards pursuant to the Plan. The Committee did establish such
a plan in 2003, and the performance shares awarded are indicated above.
Loans to Executive Officers of the Company
Prior to enactment of the Sarbanes-Oxley Act in July 2002,
the Company made a loan, in 1997, to its now-President
Europe, Rolf van Kaldekerken, in the amount of $322,114*.
The loan bears interest at the rate of 6% per annum (payable
interest only each year), is secured by a mortgage on Mr. van
Kaldekerken’s personal residence and is repayable either upon
Mr. van Kaldekerken’s departure from the Company, or sale
of his personal residence. There is no provision for earlier
repayment, other than a voluntary repayment by Mr. van
Kaldekerken. This loan will not be renewed or extended.
Office Depot, Inc. has ceased making any loans of any type to
executive officers for any purposes whatsoever and no longer
will extend or maintain credit to, or renew any extension of
credit, in the form of a personal loan, to or for the benefit of
any of its executive officers or directors.
*Calculated on the balance due on a loan now denominated
as 255,646 euros, translated to U.S. dollars at the year-end
conversion of $1.26 to the euro.
CEO Compensation
Employment Agreement. Effective December 29, 2001, we
entered into a new Employment Agreement with Bruce
Nelson (the “ Employment Agreement”) to serve as Chairman
of the Board and Chief Executive Officer. The Employment
Agreement amends, restates and supersedes certain prior
agreements with Mr. Nelson. Mr. Nelson first became CEO on
July 17, 2000. Under the terms of the Employment Agreement,
we have agreed to employ Mr. Nelson through at least
December 31, 2004. The Employment Agreement provides
for automatic renewal for a period of one year (and from year
to year thereafter) unless and until either Mr. Nelson or our
Company notifies the other, in writing, at least six months
prior to the end of the Employment Term (initially December
31, 2004), that he or it does not wish to renew the Employment
Agreement.
Salary and Bonus. As of December 29, 2001, the date of
the Employment Agreement, Mr. Nelson’s base salary was
$1,000,000 per year. There has been no increase in Mr.
Nelson’s base salary subsequent to that date. The Agreement
provides that Mr. Nelson’s salary will be reviewed annually
by our Compensation Committee and may be increased, but
not decreased. Under the Agreement, Mr. Nelson also will
participate in our Executive Officer Bonus Plan (“ Bonus
Plan”). Under this Plan, our Compensation Committee estab-
lishes annual performance targets for our CEO. We intend
these performance targets to qualify as incentive compensa-
tion under Section 162(m) of the Internal Revenue Code, inso-
far as that is possible. Mr. Nelson’s bonus, if any, is primarily
tied to earnings per share of the Company. For 2002 and sub-
sequent years under the Employment Agreement, Mr. Nelson
is eligible to achieve a bonus up to 200% of his base salary for
achieving the “ maximum” level of performance. His “ mini-
mum”bonus level (provided our Company’s performance in a
given year qualifies for any bonus payment) is 70% of base
salary, and his “ target” bonus is 100% of base salary. Mr.
Nelson did not receive a bonus for 2003.