Digital River 2006 Annual Report Download - page 101

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10. Stockholders’ Equity:
Share Repurchase Program
In April 2005, our Board of Directors authorized a new share repurchase program of up to $50.0 million
of our outstanding shares of common stock. This new program superseded and replaced the $5.0 million share
repurchase program adopted in 2001. Under the new program, the shares may be repurchased in the open
market or in privately negotiated transactions. Repurchases are at our discretion based on ongoing assessments
of the capital needs of the business, the market price of our common stock and general market conditions. No
time limit was set for the completion of the repurchase program. During 2005, we repurchased a total of
483,371 shares at a weighted average price per share of $27.20. No shares were repurchased during 2006 or
2004.
11. Employee Benefit Plans:
Option and Restricted Stock Awards
Prior to the annual stockholders’ meeting held in May 2005, we had two stock-based employee
compensation plans. At the annual stockholders’ meeting held in May 2005, our stockholders approved an
amendment and restatement of our 1998 Stock Option Plan that combined the 1998 Plan with our 1999 Stock
Option Plan and gave us the flexibility to grant restricted stock awards, restricted stock unit awards and
performance shares, in addition to incentive and nonstatutory stock options, to our directors, employees, and
consultants under the combined plan. We call our new amended and restated plan our 1998 Equity Incentive
Plan (the “1998 Plan”).
As of December 31, 2006, there were 1,540,200 shares available for future awards under our 1998 Plan.
The number of shares available will be reduced by three shares for every two shares granted under the stock
award plan that does not provide for full payment by the participant.
Options granted to employees typically expire no later than ten years after the date of grant. Incentive
stock option grants must have an exercise price of at least 100% of the fair market value of a share of
common stock on the grant date. Incentive stock options granted to employees who, immediately before such
grant, owned stock directly or indirectly representing more than 10% of the voting power of our stock will
have an exercise price of 110% of the fair market value of a share of common stock on the grant date and will
expire no later than five years from the date of grant. The 1998 Plan also provides for other stock-based
awards as may be established by the Board of Directors or the Compensation Committee.
97
DIGITAL RIVER, INC.
Notes to Consolidated Financial Statements — (Continued)