The Nevada Stock Option and Stock Award Plan of American Stores Company is an employee compensation program initiated by the company to reward its employees with stock options and stock awards. This plan grants employees the opportunity to purchase company stocks at a predetermined price within a specified period. Under the Nevada Stock Option and Stock Award Plan, employees are provided with stock options, giving them the right to buy a specific number of company stocks at a favorable price, referred to as the exercise price. These stock options are typically granted as an incentive to motivate and retain employees, linking their financial success with that of the company. The American Stores Company offers various types of stock options and stock awards through the Nevada Stock Option and Stock Award Plan, including: 1. Non-Qualified Stock Options: These are stock options offered to employees that do not meet specific tax requirements. Usually, the difference between the market price and the exercise price is subject to income tax when exercised. 2. Incentive Stock Options (SOS): Also known as statutory stock options, SOS are stock options that meet specific requirements set by the Internal Revenue Service (IRS). They offer favorable tax treatment, as the gains from exercising SOS are taxed at a lower rate than non-qualified stock options. 3. Restricted Stock Units (RSS): RSS are stock awards that are granted to employees with certain restrictions. These shares are usually subject to vesting conditions and are granted based on an employee's performance or tenure. Once the vesting conditions are met, the employee receives the stock award and becomes a shareholder. 4. Performance Shares: Performance shares are stock awards granted to employees based on the company's performance against predetermined financial or operational targets. These awards provide an opportunity for employees to acquire company stocks if the performance goals are achieved within a specified timeframe. 5. Employee Stock Purchase Plan (ESPN): The ESPN is a voluntary plan that allows employees to purchase company stocks at a discounted price. A portion of the employee's salary is often allocated towards purchasing stocks during designated offering periods. By implementing the Nevada Stock Option and Stock Award Plan, the American Stores Company seeks to align the interests of its employees with the company's long-term growth and success. This compensation program aims to incentivize employees, foster loyalty, and retain top talent within the organization.