Blizzard 2009 Annual Report Download - page 85

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73
NonPlanEmployeeStockOptions
InconnectionwithprioremploymentagreementsbetweenActivision,Inc.andRobertA.Kotick,
ourChiefExecutiveOfficer,andBrianG.Kelly,ourCoChairman,Mr.KotickandMr.Kellywere
previouslygrantedoptionstopurchasecommonstockofActivision,Inc.whichwerenotawardedundera
stockholderorboardapprovedplan.TheseawardswereassumedasaresultoftheBusinessCombination
andaccountedforasanexchangeforoptionstopurchaseourcommonstock.Allnonplanoptionswere
exercisedduring2009.
BlizzardEquityPlan(“BEP”)
In2006,BlizzardimplementedtheBEP,anequityincentiveplandenominatedinU.S.dollars.
UndertheBEP,restrictedsharesofBlizzardstockandothercashsettledawardsweregrantedtocertain
keyexecutivesandemployeesofBlizzard.
UndertheprovisionsoftheBEPandtheBusinessCombinationAgreement,theconsummationof
theBusinessCombinationwasdeemedtobeachangeincontrol.Assuch,theoutstandingnonvested
rightsbecameimmediatelyvestedupontheclosingoftheBusinessCombination,cancelledand
extinguishedandconvertedintoanewrighttoreceiveanamountincasheighteenmonthsaftertheclosing
uponthetermsandsubjecttotheconditionssetforthintheBEPandintheBusinessCombination
Agreement,includingcontinuedemploymentthroughthepaymentdate.Thedeterminationofthevalueof
Blizzardsharesuponachangeincontrolwasequaltothetransactionvalueundertheprovisionsofthe
BEP.AtDecember31,2009,unrecognizedcompensationexpenseundertheBEPwaslessthanamillion,
whichwillberecognizedduringthethreemonthsendedMarch31,2010.AtDecember31,2009,other
currentliabilitiesintheconsolidatedbalancesheetinclude$87millionrelatedtothisplan,andat
December31,2008,othernoncurrentliabilitiesinclude$70millionrelatedtothisplan.
StockbasedCompensationExpense
Thefollowingtablesetsforththetotalstockbasedcompensationexpenseresultingfromstock
optionsgrantedbyActivision.Inc.orActivisionBlizzard,restrictedstockrightsawardedby
Activision,Inc.orActivisionBlizzard,awardsmadetoouremployeesundertheBEP,andawardsmadeto
ouremployeesundertheVivendicorporateplansdescribedbelowincludedinourconsolidatedstatements
ofoperationsfortheyearsendedDecember31,2009,2008,and2007(amountsinmillions):
Fortheyearsended
December31,
2009
2008
2007
Costofsales—softwareroyaltiesandamortization...............................
$34
$4
$3
Productdevelopment................................................................
40
44
93
Salesandmarketing...............................................................................
9
10
8
Generalandadministrative................................................................
71
31
34
Restructuring.........................................................................................
2
—
—
Stockbasedcompensationexpensebeforeincometaxes......................
156
89
138
Incometaxbenefit.................................................................................
(61)
(35)
(54)
Totalstockbasedcompensationexpense,netofincometax
benefit................................................................................................
$95
$54
$84
 