Overstock.com 2006 Annual Report Download - page 109

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company's average stock
price of $21.12 during the year ended December 31, 2006, which would have been received by the option holders had all option
holders exercised their options as of that date. The total number of in-the-money options exercisable as of December 31, 2006 was
573,468.
The weighted average exercise price of options granted during the year ended December 31, 2006 was $22.47 per share. The total
fair value of the shares vested during the year ended December 31, 2006 was $3.1 million. The total intrinsic value of options
exercised during the year ended December 31, 2006 was $3.3 million. The total cash received from employees as a result of employee
stock option exercises during the year ended December 31, 2006 was approximately $2.5 million. In connection with these exercises,
there was no tax benefit realized by the Company due to the Company's current loss position.
19. PERFORMANCE SHARE PLAN
In January 2006, the Board and Compensation Committee adopted the Overstock.com Performance Share Plan, and approved
grants to executive officers and certain employees of the Company. The Performance Share Plan provides for a three-year period for
the measurement of the Company's attainment of certain performance goals, but at the Company's sole option the Company may make
a payment of estimated amounts payable to a plan participant after two years.
The performance goal is measured by growth in economic value, as defined in the plan. The amount of payments due to
participants under the plan will be a function of the then current market price of a share of the Company's common stock, multiplied
by a percentage dependent on the extent to which the performance goal has been attained, which will be between 0% and 200%. If the
growth in economic value is 10% compounded annually or less, the percentage will be 0%. If the growth in economic value is 25%
compounded annually, the percentage will be 100%. If the growth in economic value is 40% compounded annually or more, the
percentage will be 200%. If the percentage growth is between these percentages, the payment percentage will be determined on the
basis of straight line interpolation. Amounts payable under the plan will be payable in cash. During interim and annual periods prior to
the completion of the three-year measurement period, the Company records compensation expense based upon the period-end stock
price and estimates regarding the ultimate growth in economic value that is expected to occur. These estimates include assumed future
growth rates in revenues, gross margins and other factors. If the Company were to use different assumptions, the estimated
compensation charges could be significantly different. As of December 31, 2006, the Company has accrued $900,000 in total
compensation expense under the plan.
20. EMPLOYEE RETIREMENT PLAN
The Company has a 401(k) defined contribution plan which permits participating employees to defer up to a maximum of 25% of
their compensation, subject to limitations established by the Internal Revenue Code. Employees who have completed a half-year of
service and are 21 years of age or older are qualified to participate in the plan. The Company matches 50% of the first 6% of each
participant's contributions to the plan. Beginning in 2006, the Company's matching contribution is comprised of common stock issued
from treasury to employees. Participant contributions are immediately vested. Company contributions vest based on the participant's
years of service at 20% per year over five years. The Company's matching contribution totaled $124,000, $261,000 and $389,000
during 2004, 2005 and 2006, respectively. In addition, the Company made a discretionary contribution of $235,000, $342,000 and
$409,000 during 2004, 2005 and 2006 to eligible participants as of the end of each respective calendar year.
F-31