Adobe 2007 Annual Report Download - page 87

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87
Deferred Compensation Plan
On September 21, 2006, the Board of Directors approved the Adobe Systems Incorporated Deferred Compensation Plan,
effective December 2, 2006 (the “Deferred Compensation Plan”). The Deferred Compensation Plan is an unfunded, non-
qualified, deferred compensation arrangement under which certain executives and members of the Board of Directors are able
to defer a portion of their annual compensation. Participants may elect to contribute up to 75% of their base salary and 100%
of other specified compensation, including commissions, bonuses, performance-based and time-based restricted stock units,
and directors’ fees. Participants are able to elect the payment of benefits to begin on a specified date at least three years after
the end of the plan year in which the election is made in the form of a lump sum or annual installments over five, ten or
fifteen years. Upon termination of a participant’ s employment with Adobe, such participant will receive a distribution in the
form of a lump sum payment. All distributions will be made in cash, except for deferred performance-based and time-based
restricted stock units which will be settled in stock. As of November 30, 2007, the invested amounts under the Deferred
Compensation Plan total $3.1 million and are recorded as long-term other assets on our balance sheet. As of November 30,
2007, we recorded $3.1 million as a long-term liability to recognize undistributed deferred compensation due to employees.
Note 11. Stock-based Compensation
We have the following stock-based compensation plans and programs as described below.
Stock Option Plans
Our stock option program is a long-term retention program that is intended to attract, retain and provide incentives for
talented employees, officers and directors, and to align stockholder and employee interests. Currently, we grant options from
the (i) 2003 Equity Incentive Plan (the “2003 Plan”), under which options can be granted to all employees, including
executive officers, and outside consultants and (ii) the 1996 Outside Directors Stock Option Plan (“Directors Plan”), as
amended, under which options are granted automatically under a pre-determined formula to non-employee directors. The
Directors Plan will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the shares
available for issuance under the plan have been issued and restrictions on issued shares have lapsed. In addition, our stock
option program includes the 2005 Equity Incentive Assumption Plan (“2005 Assumption Plan”), from which we currently do
not grant options, but may do so. The plans listed above are collectively referred to in the following discussion as “the Plans”.
Option vesting periods are generally three to four years for all of the Plans.
As of November 30, 2007, we had reserved 79.1 million, 5.2 million and 1.6 million shares of common stock for
issuance under our 2003 Plan, Directors Plan and 2005 Assumption Plan, respectively. As of November 30, 2007, we had
31.9 million, 0.8 million and 1.6 million shares available for grant under our 2003 Plan, Directors Plan and 2005 Assumption
Plan, respectively.
Employee Stock Purchase Plan
Our 1997 Employee Stock Purchase Plan (the “ESPP”) allows eligible employee participants to purchase shares of our
common stock at a discount through payroll deductions. The ESPP consists of a twenty-four month offering period with four
six-month purchase periods in each offering period. Employees purchase shares in each purchase period at 85% of the market
value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is
lower. The ESPP will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the shares
available for issuance under the plan have been issued.
As of November 30, 2007, we had reserved 76.0 million shares of our common stock for issuance under the ESPP and
approximately 18.0 million shares remain available for future issuance.
Restricted Stock Plan
We grant restricted stock awards and performance awards to officers and key employees under our Amended 1994
Performance and Restricted Stock Plan (the “Restricted Stock Plan”). We can also grant restricted stock units to all eligible
employees. Restricted stock issued under the Restricted Stock Plan generally vests annually over four years.