2K Sports 2008 Annual Report Download - page 98

15. STOCK-BASED COMPENSATION
Our stock-based compensation plans are broad-based, long-term retention programs intended to attract
and retain talented employees and align stockholder and employee interests. For similar reasons, we also
granted non-employee equity awards, which are subject to variable accounting, to ZelnickMedia in
connection with their contract to provide executive management services to us. We began replacing stock
option awards with restricted stock awards in 2007. We issue shares to employees on the date the restricted
stock is granted and therefore shares granted have voting rights and are considered issued and outstanding.
In April 2008, our stockholders approved an increase to the number of shares available for grant under the
Incentive Stock Plan from 4,500,000 to 6,500,000. The Incentive Stock Plan is administered by the
Compensation Committee of the Board of Directors and allows for awards of restricted stock, deferred
stock and other stock-based awards of our common stock to employees and non-employees. As of
October 31, 2008, there were approximately 1,090,000 shares available for issuance under the Incentive
Stock Plan.
In June 2002, our stockholders approved our 2002 Stock Option Plan, as previously adopted by our Board
of Directors (the ‘‘2002 Plan’’), pursuant to which officers, directors, employees and consultants may
receive stock options to purchase shares of our common stock. In June 2005, our stockholders approved an
increase in the aggregate amount of shares issuable under the 2002 Plan from 9,000,000 shares to
11,000,000 shares. As of October 31, 2008, there were approximately 1,150,000 shares available for
issuance under the 2002 Plan.
In January 1997, our stockholders approved our 1997 Stock Option Plan, as amended, as previously
adopted by our Board of Directors (the ‘‘1997 Plan’’), pursuant to which officers, directors, employees and
consultants may receive options to purchase up to an aggregate of 6,500,000 shares (9,750,000 shares after
stock split in April 2005) of our common stock. As of October 31, 2008, there were no shares of common
stock available for issuance under the 1997 Plan.
Subject to the provisions of the plans, the Board of Directors or any Committee appointed by the Board of
Directors, has the authority to determine the individuals to whom the stock options or other awards are to
be granted, the number of shares to be covered by each option or other award, the option price, the type of
option, the option period, restrictions, if any, on the exercise of the option or other award, the terms for
the payment of the option price and other terms and conditions of the option or other award.
The following table summarizes stock-based compensation expense resulting from stock options and
restricted stock included in our Consolidated Statements of Operations:
Years Ended October 31,
2008 2007 2006
Cost of goods sold $13,461 $ 3,216 $ 1,263
Selling and marketing 2,370 1,232 1,256
General and administrative 19,678 7,080 13,277
Research and development 4,878 3,735 6,135
Business reorganization and related —2,066 —
Stock-based compensation expense 40,387 17,329 21,931
Capitalized stock-based compensation expense 8,215 9,983 8,084
Total stock-based compensation expense, net of income tax benefit $48,602 $27,312 $30,015
During the years ended October 31, 2008 and 2007, we recorded $13,481 and $1,283 of stock-based
compensation expense for non-employee awards, respectively. We did not record any stock-based
compensation expense for non-employee awards for the year ended 2006.
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