DLTR » Topics » Summary of the 2003 Equity Incentive Plan

This excerpt taken from the DLTR DEF 14A filed May 9, 2008.

Summary of the 2003 Equity Incentive Plan


The 2003 Equity Incentive Plan (“2003 EIP”) permits us to grant a variety of equity awards. Its purpose is to promote our interests and the interests of our shareholders by motivating key employees to work towards achieving our long-range goals and by attracting and retaining exceptional employees.  By motivating key employees to share in our long-term growth and financial success, employee interests are more closely aligned with those of our shareholders.


Administration.    The plan is administered by the Compensation Committee of the Board. The committee is authorized to, among other things:


·                  determine which employees will be granted awards;


·                  determine whether awards will be for non-qualified stock options, incentive stock options (which qualify for special treatment under Section 422 of the Internal Revenue Code), stock appreciation rights, performance units, restricted stock and other stock;


·                  determine whether any award is intended to be "performance-based compensation" under Section 162(m) of the Internal Revenue Code and what performance measures approved by the shareholders shall be used in connection with such award;


·                  determine the terms and conditions of each participant's individual award agreement, including vesting schedules, lapsing conditions, and transfer restrictions for each award; and


·                  make all other determinations necessary or advisable to administer the plan.


Stock Options.    Options to purchase shares of common stock of the Company (“common stock”) granted under the 2003 EIP may be incentive stock options that qualify for favorable income tax treatment or non-statutory stock options.  The purchase price of common stock covered by an option may not be less than 100% of the fair market value of the common stock on the date of the option grant.  On April  18, 2008, the closing price of the common stock was $30.54 per share.  Options may be exercised only at such times as may be specified by the Compensation Committee in the participant's stock option agreement.  If the option so provides, a participant exercising an option may pay the purchase price through cash payments, by the delivery of shares of stock, or by such other methods of exercise as may be approved by the committee from time to time.


Stock Appreciation Rights.    The Compensation Committee may award stock appreciation rights alone or in tandem with non-statutory stock options, and impose such conditions upon their exercise as it deems appropriate.  When the stock appreciation right is exercisable, the holder may surrender all or a portion of his unexercised stock appreciation right and receive in exchange an amount equal to the excess of (i) the fair market value on the date of exercise of the common stock covered by the surrendered portion of the stock appreciation right over (ii) the fair market value of the common stock on the date of grant.  The payment may be in cash or shares of stock.  The committee may limit the amount that can be received when a stock appreciation right is exercised.




Repricing of options and stock appreciation rights after the date of grant is not permitted.


Restricted Stock.    Restricted stock issued pursuant to the 2003 EIP is subject to the following general restrictions: (i) none of such shares may be sold, transferred, pledged, or otherwise encumbered or disposed of until the restrictions on such shares shall have lapsed or been removed under the provisions of the plan, and (ii) if a holder of restricted stock ceases to be employed by the company, such holder will forfeit any shares of restricted stock on which the restrictions have not lapsed or been otherwise removed. The Compensation Committee establishes as to each share of restricted stock issued under the 2003 EIP the terms and conditions upon which the restrictions on such shares shall lapse. Such terms and conditions may include, without limitation, the lapsing of such restrictions at the end of a specified period of time, the meeting of performance goals, or as a result of the disability, death or retirement of the recipient.


Stock Units and Restricted Stock Units.    The Compensation Committee may award participants either the right to receive shares in the future or the right to receive restricted stock in the future. Any such awards are subject to conditions, restrictions and contingencies as the committee may determine.


Performance Awards.    The Performance Awards and Award Limits under the 2003 EIP are discussed above beginning on page 36.


Other Terms and Conditions.    All company employees, including our executive officers, and independent contractors selected by the Compensation Committee are eligible to participate in the plan. As of April 18, 2008, we employed approximately 40,007 persons.  Generally, awards may only be transferred upon death, but the committee may provide for broader transferability in the award agreement. The committee also has the authority to determine the vesting and expiration of the awards.


Shares To Be Issued Under the Plan.     As of April 18, 2008, the number of shares of our common stock we may grant as awards under the 2003 EIP is 4,282,317, plus any additional shares which may become available when outstanding options under the old Stock Incentive Plan lapse or are forfeited. The Compensation Committee may, however, adjust this maximum amount to account for any future stock split, reverse stock split, stock dividend, combination, or reclassification of common stock or any similar transaction effected for which we do not receive any payment. When an award is forfeited or lapses, including awards under the old plan, the shares subject to that award become available for future awards under the 2003 EIP. Also, shares tendered in payment for the exercise price or the related withholding obligation will increase the number of shares available for awards under the plan. No awards may be made after July 1, 2013, the tenth anniversary of the effective date of the 2003 EIP.


Change of Control.    In the event of a change of control of the company, the Compensation Committee has discretion to accelerate the vesting or exercisability of any awards and to cash-out any and all outstanding awards, subject to limitations imposed by the Internal Revenue Code. The committee also has the right to substitute or assume awards in connection with mergers, reorganizations, or other transactions.


Amendment.    The Board may amend or terminate the 2003 EIP at any time. We must obtain shareholder approval for any change that would require such approval under listing standards of the NASDAQ Stock Market and any regulatory or tax requirement with which the Board desires to comply. However, no rights under an outstanding award may be impaired by such action without the consent of the holder.


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