Office Depot 2009 Annual Report Download - page 75

On January 14, 2010, the federal court in the Southern District of Florida dismissed the Second Consolidated
Amended Complaint filed by the New Mexico Educational Retirement Board, lead plaintiff in a Consolidated
Lawsuit, with prejudice. On February 9, 2010, the lead plaintiff filed a notice to appeal this decision. As
background, in early November 2007, two putative class action lawsuits were filed against the company and
certain of its executive officers alleging violations of the Securities Exchange Act of 1934. The allegations made
in these lawsuits primarily related to the accounting for vendor program funds. Each of the foregoing lawsuits
was filed in the Southern District of Florida and captioned as follows: (1) Nichols v. Office Depot, Inc., Steve
Odland and Patricia McKay filed on November 6, 2007 and (2) Sheet Metal Worker Local 28 Pension Fund v.
Office Depot, Inc., Steve Odland and Patricia McKay filed on November 5, 2007. On March 21, 2008, the court
in the Southern District of Florida entered an Order consolidating the class action lawsuits (the “Consolidated
Lawsuit”). Lead plaintiff in the Consolidated Lawsuit, the New Mexico Educational Retirement Board, filed its
Consolidated Amended Complaint on July 2, 2008, and its Second Consolidated Amended Complaint on
April 20, 2009.
In addition, in the ordinary course of business, our sales to and transactions with government customers may be
subject to audits and review by governmental authorities and regulatory agencies. Many of these audits and
reviews are resolved without incident; however, we have had several claims and inquiries by certain
governmental agencies into contract pricing, and additional inquiries may follow. While these claims may assert
large demands, we do not believe that contingent liabilities related to these matters, either individually or in the
aggregate, will materially affect our financial position, results of our operations or cash flows.
NOTE I — EMPLOYEE BENEFIT PLANS
Long-Term Incentive Plan
During 2007, the company’s board of directors adopted a new equity incentive plan which obtained shareholder
approval on April 25, 2007. This plan is known as the Office Depot, Inc. 2007 Long-Term Incentive Plan (the
“Plan”) and replaces the Long-Term Equity Incentive Plan which expired in October 2007. We believe the Plan
aligns the interests of its officers, directors and key employees with the interests of its shareholders. The Plan
permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units,
performance-based, and other equity-based incentive awards. The option exercise price for each grant of a stock
option shall not be less than 100% of the fair market value of a share of common stock on the date the option is
granted. Options granted under the Plan become exercisable from one to five years after the date of grant,
provided that the individual is continuously employed with the company. All options granted expire no more than
ten years following the date of grant.
Long-Term Incentive Stock Plan
A summary of the activity in our stock option plans for the last three years is presented below.
2009 2008 2007
Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price
Outstanding at beginning of year ..... 14,479,141 $ 22.78 13,594,302 $ 23.86 12,384,083 $ 20.14
Granted ......................... 11,901,752 0.93 3,185,511 10.56 3,522,720 32.52
Canceled ........................ (2,178,178) 15.99 (2,190,928) 21.48 (434,863) 25.12
Exercised ........................ ——(109,744) 10.36 (1,877,638) 16.11
Outstanding at end of year .......... 24,202,715 $ 11.81 14,479,141 $ 22.78 13,594,302 $ 23.86
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