Blizzard 2008 Annual Report Download - page 99

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plans. The following paragraphs describe the various plans established by Vivendi in which
Vivendi Games’ employees participated.
(i) Plans granted to non-U.S. resident executives and employees (settled in equity)
Stock Option plans settled in equity
Stock options have been granted to Vivendi Games’ employees to acquire Vivendi stock.
For all stock option plans established by Vivendi prior to January 1, 2007, the options granted vest
annually in one-third tranches over three years from the grant date’s anniversary. Two-thirds of
those vested options become exercisable at the beginning of the third year from the date of grant,
and the remaining one-third becomes exercisable at the beginning of the fourth year from the date
of grant. The related compensation cost is accounted for over the required three-year service
period using the accelerated multi-tranche method in accordance with the following spread rates:
61% in the first year of the plan, 28% in the second year and 11% in the third year.
In 2007, Vivendi Games employees received stock options which cliff vest at the end of a
three-year vesting period. The stock-based compensation expense related to these stock options is
recognized on a straight-line basis over the vesting period. These plans are denominated in Euros.
Restricted Share Units (RSUs) plans settled in equity
In 2006, Vivendi established restricted share plans. Granting of shares under these plans
to non-U.S. resident executives and employees is triggered by the achievement of certain
operating objectives as set forth in Vivendi’s annual budget, and then cliff vest at the end of a
two-year vesting period. The operating objectives for granting the RSUs were satisfied in 2006
and 2007. As the shares granted under these plans are ordinary shares of the same class as Vivendi
outstanding shares, employee shareholders are entitled to dividend and voting rights relating to
their shares upon vesting. These shares cannot be sold until after a four-year period from the date
of grant. These plans are denominated in Euros.
Compensation cost recognized is based upon the value of the equity instrument received
by the employees which is equal to the difference between the fair value of the shares to be
received and the discounted value of the dividends expected to be distributed by Vivendi over the
two-year vesting period. Compensation cost relating to restricted shares is recognized on a
straight-line basis over the two-year vesting period.
(ii)Plans granted to U.S. resident executives and employees (settled in cash)
In 2006, in connection with the delisting of Vivendi shares from the New York Stock
Exchange, specific equity awards were granted to Vivendi Games’ U.S. resident executives and
employees, with economic characteristics similar to those granted to non-U.S. employees.
However, these equity instruments are exclusively cash-settled instruments with the following
characteristics:
• When the equity awards grant entitlement to the appreciation of the value of Vivendi
shares, they are known as “stock appreciation rights” (“SARs”), which are the
economic equivalent of stock options;