Radio Shack 2003 Annual Report Download - page 51

RADIOSHACK 2003 Annual Report 49
ISPs generally provide that,in the event of a change in control,
all options become immediately and fully exercisable.
Repricing or exchanging options for lower priced options is
not permitted under the ISPs without shareholder approval.
The 1997, 1999 and 2001 ISPs specify that each of our non-
employee directors will receive a grant of non-qualified
stock options (options which are not incentive stock
options) (“NQs”) for 16,000 shares of our common stock on
the first business day of September each year (“Director
Options”). However, Director Option grants are not made
under more than one ISP in the same year. New directors,
upon election or appointment, will receive a one-time grant
of 20,000 shares at the time they attend their first Board
meeting, and these new directors will not receive the
annual Director Option grant until they have served at least
one year. Director Options under the 1997 ISP have an
exercise price of 100% of the fair market value of our
common stock on the trading day prior to the date of
grant. Director Options under the 1999 and 2001 ISPs have
an exercise price of 100% of the fair market value of a
share of our common stock on the date of grant. If a grant
is made under the 1999 or 2001 ISPs on a non-trading date,
the closest previous trading date is used. Under these ISPs,
one-third of the Director Options vest annually on the first
three anniversary dates of the date of grant and options
expire ten years after the date of grant.
A brief description of each our stock plans follows:
>1993 Incentive Stock Plan (“1993 ISP”): The 1993 ISP permitted
the grant of up to 12.0 million shares in the form of
incentive stock options (“ISOs”), NQs and restricted stock.
There were no shares available on December 31, 2003,
for grants under the 1993 ISP.The 1993 ISP terminated on
March 28, 2003, and no further grants may be made
under this plan.
>1994 Stock Incentive Plan (“1994 SIP”): As part of the pur-
chase of AmeriLink in 1999 (see Note 6), we assumed the
existing AmeriLink Corporation 1994 Stock Incentive Plan
and certain related agreements and agreed to convert
AmeriLink’s stock options to stock options to purchase
our stock, subject to an agreed upon exchange ratio and
conversion price.Thus, the AmeriLink 1994 SIP was
assumed and adopted by us in 1999. All options in the
1994 SIP were fully vested on the date of transition and
management has determined that no further grants will
be made under this plan, although 53,259 shares were
still available at December 31, 2003, under the 1994 SIP.
There were certain restricted stock agreements that
Future minimum rent commitments in the table above
exclude future rent obligations associated with stores
closed under the 1996 restructuring plan. Estimated pay-
ments to settle future rent obligations associated with
these stores have been accrued in the restructuring reserve
(see Note 10).
RENT EXPENSE
Year Ended December 31,
(In millions) 2003 2002 2001
Minimum rents $245.7 $ 240.9 $226.3
Contingent rents 4.4 4.0 4.0
Total rent expense $250.1 $244.9 $230.3
Contingent Liabilities: We have contingent liabilities related
to retail leases of locations which were assigned to other
businesses.The majority of these contingent liabilities
relate to various lease obligations arising from leases that
were assigned to CompUSA, Inc. as part of the sales of our
Computer City, Inc. subsidiary to CompUSA, Inc. in August
1998. In the event CompUSA or the other assignees, as
applicable, are unable to fulfill their obligations, we would
be responsible for rent due under the leases. Our rent expo-
sure from the remaining undiscounted lease commitments
with no projected sublease income is approximately $183
million. However, we have no reason to believe that
CompUSA or the other assignees will not fulfill their obliga-
tions under these leases; consequently, we do not believe
there will be a material impact on our financial statements.
Note 18 Stock Options and Performance Awards
We have implemented several plans to award employees
stock-based compensation. Under the Incentive Stock Plans
(“ISPs”) described below, the exercise price of options must
be equal to or greater than the fair market value of a share
of our common stock on the date of grant.The 1997, 1999
and 2001 ISPs each terminate after ten years; no option or
award may be granted under the ISPs after the ISP termi-
nation date.The Management Development and
Compensation Committee (the “Committee”) specifies the
terms for grants of options under these ISPs; terms of these
options may not exceed 10 years. Grants of options gener-
ally vest over three years and grants typically have a term of
seven or 10 years. Option agreements issued under the