Adobe 2001 Annual Report Download - page 86

ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 10. Employee Stock Plans (Continued)
Restricted shares issued under the Plan generally vest annually between two to three years but are
considered outstanding at the time of grant, as the stockholders are entitled to dividends and voting rights.
As of November 30, 2001, 316,474 shares were outstanding and not yet vested. In fiscal 2001, 2000, and
1999, we granted 56,146, 453,885, and 1,047,920 shares of restricted stock, respectively, and the weighted
average fair value of the shares was $39.44, $58.66, and $22.71, respectively. Additionally, we charged
$18.0 million, $16.5 million, and $5.3 million to expense associated with restricted stock in fiscal 2001, 2000,
and 1999, respectively. As of November 30, 2001, approximately 2.8 million shares are available for grant
under this Plan.
Performance awards issued under the Plan entitle the recipient to receive, at our discretion, shares or
cash upon completion of the performance period subject to attaining identified performance goals.
Performance awards are generally measured over a three-year period and cliff vest at the end of the
three-year period. We accrue the projected value of these awards and charge this amount to expense over
the three-year performance period. We did not grant performance awards in fiscal 2001, 2000 or 1999. As
of November 30, 2001 and December 1, 2000, there were no performance awards outstanding. As of
December 3, 1999, performance awards for 640,720 shares were outstanding and $0.4 million was credited
to expense in fiscal 1999.
Employee Stock Purchase Plan
Our Employee Stock Purchase Plan allows eligible employee participants to purchase shares of our
common stock at a discount through payroll deductions. For offerings commencing before
September 2000, the plan consisted of twelve-month offerings with two six-month purchase periods in each
offering period; in September 2000, the plan was amended to increase the offering periods for offerings
commencing after that date to twenty-four-month offering periods with four six-month purchase periods in
each offering period. As of January 1, 2001, all employees participating in the plan have twenty-four-month
offering periods. Employees purchase shares at 85% of the market value at either the beginning of the
offering period or the end of the purchase period, whichever price is lower. As of November 30, 2001, we
had reserved 38.0 million shares of our common stock for issuance under this plan, and approximately
16.3 million shares remain available for future issuance.
The weighted average fair value of the purchase rights granted in fiscal 2001, 2000, and 1999 were
$22.91, $21.34, and $5.19, respectively.
Cash Incentive Awards
We grant Cash Incentive Awards (‘‘CIAs’’), a form of phantom stock, to designated key employees to
reward them based on their contributions to a project. The cash value of the CIA is structured to mirror
our Restricted Stock Plan. We grant CIAs to designated employees that generally vest annually over a
three-year period. Upon each vest date, the employee is paid the market value of the stock on the date of
vest multiplied by the number of vested shares. In fiscal 2001, due to the reduction of market value of our
stock, CIA expense was approximately ($2.5) million. We charged approximately $12.8 million and
$7.9 million to expense for shares vested in fiscal 2000 and 1999, respectively. We currently do not intend
to grant cash incentive awards in the future.
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