Amazon.com 2002 Annual Report Download - page 80

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
investment deemed to have been sold by the investees. Details of these oÅerings and the eÅect on the
Company's ownership and cost basis in the investees are as follows:
Ownership
Shares Price OÅering Basis
Issued per Amount Prior to After Adjustment
OÅering (In thousands) Share (In thousands) OÅering OÅering (In thousands)
Homegrocer.com, Inc. March
2000 initial public oÅering ÏÏÏÏ 22,000 $12.00 $264,000 27% 22% $47,646
Pets.com, Inc. February 2000
initial public oÅeringÏÏÏÏÏÏÏÏÏ 7,500 11.00 82,500 48% 34% 11,614
drugstore.com, inc. March 2000
secondary public oÅering ÏÏÏÏÏ 6,000 18.00 108,000 27% 24% 18,539
drugstore.com, inc. July 2000
private/public oÅering ÏÏÏÏÏÏÏ 8,101 4.94 40,019 23% 21% (901)
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $76,898
Stock Award Plans
The Company's stock award plans consist of the 1999 NonoÇcer Employee Stock Option Plan, the
1997 Stock Incentive Plan and the Amended and Restated 1994 Stock Option Plan. Shares reserved under
these plans consist of 40 million shares in the 1999 NonoÇcer Employee Stock Option Plan, 109 million
shares in the 1997 Stock Incentive Plan and 58 million shares in the 1994 Stock Option Plan, of which up
to a maximum of 21,025,075 shares that are not issued under that plan may be added to the aggregate
number of shares available for issuance under the 1997 Stock Incentive Plan. In connection with certain
acquisitions in 1999, the Company assumed outstanding options to purchase common stock originally
issued under the acquired companies' stock option plans. The Company's stock award plans as well as the
assumed stock award plans are hereby collectively referred to as the ""Plans.''
In 2002, the Company transitioned to using restricted stock units, awarded under the 1997 Stock
Incentive Plan, as its primary vehicle for employee equity compensation. Employees vest in restricted stock
unit awards ratably over the corresponding service term, generally three to six years. As it relates to stock
option awards, the Company's Board of Directors generally sets an exercise price of not less than the fair
market value of the Company's common stock at the date of grant. Each outstanding option granted prior
to December 20, 1996 has a term of Ñve years from the date of vesting. Generally, outstanding options
granted on or subsequent to December 20, 1996 have a term of 10 years from the date of grant. Subject to
Internal Revenue Service limitations, options granted under the Company's plans prior to April 1999 and
granted under certain assumed plans generally became exercisable immediately but are subject to a
restriction on transfer that vests over a period of time. Options granted under the Plans since April 1999
generally vest and become exercisable in accordance with the following vesting schedule: 20% after year
one, 20% after year two and 5% at the end of each quarter for years three through Ñve. Certain
outstanding options that were granted during 2000 and 2001 vest and become exercisable at the rate of
50% after year one and 50% after year two. During the Ñrst quarter of 2001, the Company oÅered a
limited non-compulsory exchange of employee stock options to employees meeting certain eligibility
criteria. Options granted pursuant to this stock option exchange vest and become exercisable at the rate of
25% after 6 months from the date of grant and 4.166% per month for the succeeding 18 months. Certain
options granted in the third quarter of 2001 generally vest and become exercisable as follows: (i) the
option vests quarterly in equal installments over a 36, 48 or 60 month period commencing on dates ranging
from grant date to October 1, 2003, (ii) the option vests 5% to 12.5% on a date approximately 12 to
16 months from date of grant with the balance vesting quarterly in equal installments over a 48 to
60 month period or (iii) the option vests 4% to 12.5% on dates approximately 6 months and 18 months
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