Cisco 2012 Annual Report Download - page 128

with the Company. The number and frequency of share-based awards are based on competitive practices,
operating results of the Company, government regulations, and other factors. Since the inception of the stock
incentive plans, the Company has granted share-based awards to a significant percentage of its employees, and
the majority has been granted to employees below the vice president level. The Company’s primary stock
incentive plans are summarized as follows:
2005 Plan As amended on November 15, 2007, the maximum number of shares issuable under the 2005 Plan
over its term is 559 million shares plus the amount of any shares underlying awards outstanding on
November 15, 2007 under the 1996 Plan, the SA Acquisition Plan, and the WebEx Acquisition Plan that are
forfeited or are terminated for any other reason before being exercised or settled. If any awards granted under the
2005 Plan are forfeited or are terminated for any other reason before being exercised or settled, then the shares
underlying the awards will again be available under the 2005 Plan.
Pursuant to an amendment approved by the Company’s shareholders on November 12, 2009, the number of
shares available for issuance under the 2005 Plan was reduced by 1.5 shares for each share awarded as a stock
grant or a stock unit, and any shares underlying awards outstanding under the 1996 Plan, the SA Acquisition
Plan, and the WebEx Acquisition Plan that expire unexercised at the end of their maximum terms become
available for reissuance under the 2005 Plan. The 2005 Plan permits the granting of stock options, restricted
stock, restricted stock units (“RSU”), the vesting of which may be performance-based or market-based along
with the requisite service requirement, and stock appreciation rights to employees (including employee directors
and officers), consultants of the Company and its subsidiaries and affiliates, and non-employee directors of the
Company. Stock options and stock appreciation rights granted under the 2005 Plan have an exercise price of at
least 100% of the fair market value of the underlying stock on the grant date and prior to November 12, 2009
have an expiration date no later than nine years from the grant date. The expiration date for stock options and
stock appreciation rights granted subsequent to the amendment approved on November 12, 2009 shall be no later
than 10 years from the grant date. The stock options will generally become exercisable for 20% or 25% of the
option shares one year from the date of grant and then ratably over the following 48 or 36 months, respectively.
Time-based stock grants and time-based RSUs will generally vest with respect to 20% or 25% of the shares or
share units covered by the grant on each of the first through fifth or fourth anniversaries of the date of the grant,
respectively. The Compensation and Management Development Committee of the Board of Directors has the
discretion to use different vesting schedules. Stock appreciation rights may be awarded in combination with stock
options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable
unless the related stock options or stock grants are forfeited. Stock grants may be awarded in combination with
non-statutory stock options, and such awards may provide that the stock grants will be forfeited in the event that
the related non-statutory stock options are exercised.
1996 Plan The 1996 Plan expired on December 31, 2006, and the Company can no longer make equity awards
under the 1996 Plan. The maximum number of shares issuable over the term of the 1996 Plan was 2.5 billion
shares. Stock options granted under the 1996 Plan have an exercise price of at least 100% of the fair market value
of the underlying stock on the grant date and expire no later than nine years from the grant date. The stock
options generally become exercisable for 20% or 25% of the option shares one year from the date of grant and
then ratably over the following 48 or 36 months, respectively. Certain other grants have utilized a 60-month
ratable vesting schedule. In addition, the Board of Directors, or other committees administering the 1996 Plan,
have the discretion to use a different vesting schedule and have done so from time to time.
Supplemental Plan The Supplemental Plan expired on December 31, 2007, and the Company can no longer make
equity awards under the Supplemental Plan. Officers and members of the Company’s Board of Directors were
not eligible to participate in the Supplemental Plan. Nine million shares were reserved for issuance under the
Supplemental Plan.
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