Adaptec 2003 Annual Report Download - page 76

Exchangeable Shares. As a result of certain acquisitions in 2000, holders of the acquired companies’ common shares received shares
exchangeable into PMC common stock. The shares are exchangeable, at the option of the holder, for PMC common stock on a
share−for−share basis. The exchangeable shares remain securities of the Company and entitle the holders to dividend and other rights
economically equivalent to that of PMC common stock and, through a voting trust, to vote at shareholder meetings of the Company.
At December 31, 2003, 2002, and 2001, these shares were exchangeable into 600,000, 636,000, and 712,000 PMC shares,
respectively.
Stockholders’ Rights Plan. The Company adopted a stockholder rights plan in 2001, pursuant to which we declared a dividend of one
share purchase right for each outstanding share of common stock. If certain events occur, including if an investor tenders for or
acquires more than 15% of the Company’s outstanding common stock, stockholders (other than the acquirer) may exercise their rights
and receive $650 worth of our common stock in exchange for $325 per right, or we may, at the Company’s option, issue one share of
common stock in exchange for each right, or we may redeem the rights for $0.001 per right.
NOTE 11. Employee Equity Benefit Plans
Employee Stock Purchase Plan. In 1991, the Company adopted an Employee Stock Purchase Plan (“PMC ESPP”) under Section 423
of the Internal Revenue Code. Under the PMC ESPP, the number of shares authorized to be available for issuance under the plan are
increased automatically on January 1 of each year until the expiration of the plan. The increase will be limited to the lesser of (i) 1%
of the outstanding shares on January 1 of each year, (ii) 2,000,000 shares (after adjusting for stock dividends), or (iii) an amount to be
determined by the Board of Directors.
During 2003, 2002, and 2001, there were 1,628,684,shares, 610,331 shares, and 245,946 shares, respectively, issued under the Plans at
weighted−average prices of $4.63, $11.73, and $31.93 per share, respectively. The weighted−average fair value of the 2003, 2002,
and 2001 awards was $2.78, $13.80, and $31.25 per share, respectively. During 2003, an additional 1,674,418 shares became
available under the PMC ESPP. As of December 31, 2003, 5,880,019 shares were available for future issuance under the PMC ESPP.
Stock Option Plans. The Company has various stock option plans that cover grants of options to purchase the Company’s common
stock. The options generally expire within five to ten years and vest over four years.
During 2000, the Company’s stockholders elected to add a provision to the 1994 Incentive Stock Plan, under which plan most of the
outstanding options have been issued. Under the new terms, the number of shares authorized to be available for issuance under the
plan shall be increased automatically on January 1, 2001 and every year thereafter until January 1, 2004. The increase will be limited
to the lesser of (i) 5% of the outstanding shares on January 1 of each year, (ii) 45,000,000 shares, or (iii) an amount to be determined
by the Board of Directors.
In 2001, the company simplified its plan structure. The 2001 Stock Option Plan (the “2001 Plan”), which was created to replace a
number of stock option plans assumed by us in connection with mergers and acquisitions we completed prior to 2001. The number of
options
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