Office Depot 2012 Annual Report Download - page 78

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OFFICE DEPOT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE H – EMPLOYEE BENEFIT PLANS
Long-Term Incentive Plan
During 2007, the Company’s Board of Directors adopted, and the shareholders approved, the Office Depot, Inc. 2007 Long-Ter
m
Incentive Plan (the “Plan”). The Plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stoc
k
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. Employee share-based awards are generally
issued in the first quarter of the year.
Long-Term Incentive Stock Plan
During 2010, the Company implemented a one-time voluntary stock option exchange program that had been approved by the
Company’s Board of Directors and the shareholders. The fair value exchange program resulted in the tender of 3.8 million shares o
f
eligible options in exchange for approximately 1.4 million of newly-issued options. No additional compensation expense resulted
from this value-for-value exchange; however, the remaining unamortized compensation expense was subject to amortization over the
three year vesting period. The new options have an exercise price of $5.13, which was the closing price of Office Depot, Inc. common
stock on the date of the exchange. The fair value of the exchanged shares was $2.97 per share. The new options are listed separately
in the tables below.
A summary of the activity in the stock option plans for the last three years is presented below.
75
2012 2011 2010
Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price
Outstanding at beginning of year
19,059,176
$6.90
20,021,044
$7.49
24,202,715
$11.81
Granted
82,00
0
3.22
3,680,85
0
4.53
5,140,900
8.11
Granted
–
o
p
tion exchan
g
e
—
—
—
—
1,350,709
5.13
Cancelled
(4,512,37
2
) 14.51
(3,567,513) 9.46
(4,510,682) 21.57
Cancelled
–
o
p
tion exchan
g
e
—
—
—
—
(3,739,557)
22.85
Exercised
(2,050,733)
0.88
(1,075,205)
0.86
(2,423,041)
0.95
Outstandin
g
at end of
y
ear
12,578,071 $5.25
19,059,176 $ 6.90
20,021,044 $7.49