cut and paste from Word help pages....
Add a watermark to a printed document
The watermark commands are available only in normal, print layout, and outline views.
On the Format menu, point to Background, and then click Printed Watermark.
Do one of the following:
To insert a picture as a watermark (watermark: Any graphic or text, such as "Confidential," that when printed appears either on top of or behind existing document text.), click Picture Watermark, and then click Select Picture. Select the picture you want, and then click Insert.
To insert a text watermark, click Text Watermark, and then select or enter the text that you want.
Select any additional options that you want, and then click Apply.
To view a watermark as it will appear on the printed page, use print layout view (print layout view: A view of a document or other object as it will appear when you print it. For example, items such as headers, footnotes, columns, and text boxes appear in their actual positions.).
Tip
If you want to use an object, such as an AutoShape (AutoShapes: A group of ready-made shapes that includes basic shapes, such as rectangles and circles, plus a variety of lines and connectors, block arrows, flowchart symbols, stars and banners, and callouts.), as a watermark, you can manually paste or insert it into the document header (header and footer: A header, which can consist of text or graphics, appears at the top of every page in a section. A footer appears at the bottom of every page. Headers and footers often contain page numbers, chapter titles, dates, and author names.). You cannot use the Printed Watermark dialog box to control these settings.
Note If you want to add a theme (theme: A set of unified design elements that provides a look for your document by using color, fonts, and graphics.), which includes document backgrounds, design elements, and color schemes, use the Themes command on the Format menu.