Petsmart 2003 Annual Report Download - page 74

PETsMART, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 14 Ì Stock Incentive Plans
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (""ESPP'') that enables essentially all employees to
purchase the Company's common stock on semi-annual oÅering dates at 85% of the fair market value of the
shares on the oÅering date or, if lower, at 85% of the fair market value of the shares on the purchase date. A
maximum of 4,000,000 shares are authorized for purchase until the ESPP plan termination date of July 31,
2012. A total of 430,000, 468,000, and 394,000 shares were purchased in 2003, 2002, and 2001, respectively,
for aggregate proceeds of $5,328,000, $3,284,000, and $1,322,000, respectively.
Restricted Stock
The Company may grant restricted stock under the PETsMART, Inc. 1997 Equity Incentive Plan and
the PETsMART, Inc. 2003 Equity Incentive Plan. Under the terms of the plans, employees may be awarded
shares of common stock of the Company, subject to approval by the Board of Directors. The employee may be
required to pay par value for the shares depending on their length of service. The shares of common stock
awarded under the plans are subject to a reacquisition right held by the Company. In the event that the award
recipient's employment by, or service to, the Company is terminated for any reason, the Company should
simultaneously and automatically reacquire for no consideration all of the unvested shares of restricted
common stock previously awarded to the recipient.
In Ñscal 2003, the Company awarded 583,000 shares of restricted stock and recorded approximately
$8,882,000 as deferred compensation with an oÅsetting credit to additional paid-in capital. Such deferred
compensation is being amortized ratably by a charge to income over the four-year term of the restricted stock
awards. In Ñscal year 2003, the Company recorded $2,090,000 of compensation expense for restricted stock.
During Ñscal year 2003, approximately 9,000 shares were reacquired by the Company due to employee
terminations.
Restricted Stock Bonus Plan
The Company had a Restricted Stock Bonus Plan, under which employees were awarded shares of
common stock of the Company, subject to approval by the Board of Directors. The shares of common stock
awarded under the Restricted Stock Bonus Plan are subject to a reacquisition right held by the Company. In
the event that the award recipient's employment by, or service to, the Company is terminated for any reason,
the Company should simultaneously and automatically reacquire for no consideration all of the unvested
shares of restricted common stock previously awarded to the recipient.
The employee was not required to make any cash payment as a condition of receiving the award. The
shares of restricted common stock awarded under the Restricted Stock Bonus Plan vested and were released
from the Company's reacquisition right under an accelerated schedule when the Company's common stock
price reached certain speciÑed targets. If the speciÑed stock price targets are not reached, the shares
nevertheless become 100% vested Ñve years after the award date, provided that the award recipient has been in
continuous service with the Company from the award date.
In Ñscal 1998, the Company awarded 286,000 shares under the Restricted Stock Bonus Plan and
recorded approximately $3,003,000 as deferred compensation with an oÅsetting credit to additional paid-in
capital. The Company accounted for this plan under APB No. 25, and related Interpretations. Such deferred
compensation was being amortized ratably by a charge to income over the Ñve-year term of the restricted
stock awards. During Ñscal 2003, 2002, and 2001 approximately 5,500, 9,200 and 25,000 shares, respectively,
were reacquired by the Company due to employee terminations.
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