Overstock.com 2008 Annual Report Download - page 110

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Table of Contents
The restricted stock units vest over three years at 25% at the end of the first year, 25% at the end of the second year and 50% at
the end of the third year. During the years ended December 31, 2006, 2007 and 2008, the Company recorded stock based
compensation related to restricted stock units of $0, $0 and $896,000.
At December 31, 2008, there were 449,000 restricted stock units that remained outstanding, no restricted stock units were vested as of
December 31, 2008. On January 13, 2009, 337,000 additional restricted stock units were granted.
Performance Share Plan
In January 2006, the Board of Directors and Compensation Committee adopted the Overstock.com Performance Share Plan (the
"Plan") and approved grants to executive officers and certain employees of the Company. The Plan provides for a three-year period for
the measurement of the Company's attainment of the performance goal described in the form of a grant.
The performance goal was measured by growth in economic value, as defined in the Plan. The amount of payments due to
participants under the Plan was 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 had been attained, which was between 0% and 200%. If the growth
in economic value was 10% compounded annually or less, the percentage was 0%. If the growth in economic value was 25%
compounded annually, the percentage was 100%. If the growth in economic value was 40% compounded annually or more, the
percentage was 200%. If the percentage growth was between these percentages, the payment percentage would be determined on the
basis of straight line interpolation. Amounts payable under the Plan were subject to Board discretion. Amounts payable under the Plan
were originally payable in cash. During interim and annual periods prior to the third quarter of 2007, the Company recorded
compensation expense based upon the period-end stock price and estimates regarding the ultimate growth in economic value that was
expected to occur. These estimates included assumed future growth rates in revenues, gross profit percentages and other factors. If the
Company were to use different assumptions, the estimated compensation charges would have been significantly different.
An amendment to the Plan to allow the Company to make payments in the form of common stock was approved by the
shareholders on May 15, 2007. In the third quarter of 2007, the Company determined the fair value of the awards on the amendment
date and determined to make the payments in the form of common stock, rather than cash. Therefore, the Company reclassified
awards under the Plan from their current status as liability awards to equity awards in accordance with SFAS No. 123(R). As of
December 31, 2007, the cumulative expense related to the performance share awards was $1.0 million.
During the year ended December 31, 2008, the Company reversed the cumulative $1.0 million in total compensation expense
under the Plan as the Board determined no payments would be made under the Plan. The Plan expired on December 31, 2008.
19. 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 through January 2008, the Company's matching contribution comprised
common stock issued from treasury to employees. For the remainder of 2008, the Company's matching contribution consisted cash
matching payment. 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 $389,000, $494,000 and $570,000 during 2006,
2007 and 2008, respectively. In addition, the Company made discretionary contributions of $409,000, $408,000, $0 during 2006, 2007
and 2008 to eligible participants as of the end of each respective calendar year. The contributions in 2006 and 2007 were settled with
Company stock in the following year.
20. OTHER INCOME (EXPENSE), NET
Other income (expense), net consisted of the following (in thousands):
Years ended December 31,
2006 2007 2008
Gain from early retirement of 3.75 %
convertible senior notes $ — $ — $ 2,849
Loss on settlement of notes receivable — — (3,929)
Other 81 (92)(366)
Other income (expense), net $ 81 $ (92)$ (1,446)
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