RSTO » Topics » Long-term Incentives

This excerpt taken from the RSTO DEF 14A filed May 30, 2006.

Long-term Incentives

Stock options are currently granted by our committee on an annual basis to all or certain of our executive officers. Stock option grants are designed to align the interests of our executive officers with those of our stockholders and provide each executive officer with a significant incentive to manage our company from the perspective of an owner with an equity stake in the business. In most cases, each grant allows the executive officer to acquire shares of the common stock at the fair market value per share on the grant date over a specified period of time not to exceed 10 years. Generally, shares subject to the option grant become exercisable in a series of installments over a three-year or four-year period, contingent upon the executive officer’s continued employment with the company. Accordingly, the option grant will provide a positive return to our executive officer only if he or she remains employed by the company during the vesting period, and then only if the market price of the shares appreciates over the option term.

The size of the option grant to each executive officer, including the Chief Executive Officer, is set by our committee at a level that is intended to create a meaningful opportunity for stock ownership based upon the individual’s current position with our company, the individual’s personal performance in recent periods and his or her potential for future responsibility and promotion over the option term. We also consider the number of unvested options held by the executive officer in order to maintain an appropriate level of equity incentive for that individual. The relevant weight given to each of these factors varies from individual to individual. We have established certain guidelines with respect to the option grants made to our executive officers, but have the flexibility to adjust those guidelines in our discretion. In particular cases, we have agreed in advance with an executive officer as part of his or her employment arrangement to grant stock options in specific amounts in future years. Stock options were granted to Patricia A. McKay, our former Chief Financial Officer, as provided in her employment arrangement with the company. Stock options also were granted to John W. Tate, our former Executive Vice President and Chief Operating Officer, a portion of which were granted pursuant to the terms of his employment arrangement with the company. In addition, stock options were granted to Jason Camp, our Senior Vice President, General Manager of Retail Business, Marta Benson, our Senior Vice President, General Manager of Direct Business, and Murray Jukes, our former Vice President, Corporate Controller.

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This excerpt taken from the RSTO DEF 14A filed May 31, 2005.

Long-term Incentives

Generally, stock option grants are made annually by our committee to each executive officer. Each grant is designed to align the interests of our executive officers with those of our stockholders and provide each officer with a significant incentive to manage our company from the perspective of an owner with an equity stake in the business. In most cases, each grant allows the executive officer to acquire shares of the common stock at the fair market value per share on the grant date over a specified period of time not to exceed 10 years. Generally, shares subject to the option grant become exercisable in a series of installments over a three-year or four-year period, contingent upon the executive officer’s continued employment with the company. Accordingly, the option grant will provide a positive return to our executive officer only if he or she remains employed by the company during the vesting period, and then only if the market price of the shares appreciates over the option term.

The size of the option grant to each executive officer, including the Chief Executive Officer, is set by our committee at a level that is intended to create a meaningful opportunity for stock ownership based upon the individual’s current position with our company, the individual’s personal performance in recent periods and his or her potential for future responsibility and promotion over the option term. We also consider the number of unvested options held by the executive officer in order to maintain an appropriate level of equity incentive for that individual. The relevant weight given to each of these factors varies from individual to individual. We have established certain guidelines with respect to the option grants made to our executive officers, but have the flexibility to adjust those guidelines in our discretion. In particular cases, we have agreed in advance with an executive officer as part of his or her employment arrangement to grant stock options in specific amounts in future years. Stock options were granted to Patricia A. McKay as part of her initial employment compensation package with us in fiscal 2003. In addition, Murray Jukes, our Vice President, Controller, and John W. Tate, our Chief Operating Officer, received stock option grants in fiscal 2004 as part of each of their initial employment compensation packages, and Marta Benson, our Senior Vice President, Merchandising and Marketing, and Jason Camp, our Senior Vice President, Retail Operations, received stock option grants in fiscal 2004 as part of their promotions to executive officer positions.

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