8x8 1999 Annual Report Download - page 54

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8X8, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Significant option groups outstanding at March 31, 1999 and related weighted average exercise price and contractual life information are as
follows:
In September 1998, the Board of Directors approved a proposal under which employees elected to cancel approximately 2,107,000 options in
exchange for grants of new options with an exercise price equal to the then current fair market value. In consideration for such repricing, each
participating employee agreed that they forfeit their right to exercise such options should they resign from the Company within 12 months of
the repricing date.
In June 1996, the Board of Directors approved a proposal under which employees elected to cancel approximately 2,467,000 options in
exchange for grants of new options with an exercise price equal to the then current fair market value as determined by the Board of Directors.
During the year ended March 31, 1997, options to purchase 2,156,800 shares under the Key Personnel Plan were exercised for partial recourse
notes. Shares issued under this plan are subject to repurchase at their original issuance price of $0.50 if the employee leaves the Company prior
to vesting. During fiscal 1999 and 1998, the Company repurchased 257,685 and 46,638 unvested shares, respectively. As of March 31, 1999,
143,029 shares were not vested.
In conjunction with the Offering, the Company recorded a deferred compensation charge of approximately $7,267,000 with respect to options
repriced and certain additional options granted in fiscal 1997. The Company recognized $416,000, $1,265,000 and $4,486,000 of said amount
as compensation expense in the fiscal years ended March 31, 1999, 1998 and 1997, respectively. The Company is recognizing the deferred
compensation over the related vesting period of the options (which is generally 48 months). At March 31, 1999 the balance of this deferred
compensation was $197,000. This deferred compensation is subject to reduction for any employee who terminates employment prior to the
expiration of such employee's option vesting period.
49
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------- -------------------- WEIGHTED
WEIGHTED WEIGHTED AVERAGE
AVERAGE AVERAGE REMAINING
EXERCISE EXERCISE CONTRACTUAL LIFE
RANGE OF EXERCISE PRICES SHARES PRICE SHARES PRICE (YEARS)
------------------------ --------- -------- --------- -------- ----------------
$0.50 to $1.40......................... 666,135 $0.50 443,568 $0.50 6.7
$1.40 to $2.80......................... 319,888 $2.44 33,196 $2.44 9.6
$2.80 to $4.20......................... 2,193,787 $2.90 867,370 $2.88 8.4
$4.20 to $5.60......................... 113,000 $4.71 22,862 $4.53 9.8
$5.60 to $7.00......................... 121,500 $6.37 31,766 $6.58 8.6
$8.40 to $9.80......................... 16,000 $8.94 4,000 $8.94 8.4
--------- ---------
3,430,310 $2.60 1,402,762 $2.25 8.2
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