EMC 2003 Annual Report Download - page 64

EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2003, options to purchase 75,000 shares of Common Stock with an exercise price of $.01 per share were granted to an employee. The options were
exercisable on the date of grant and were exercised. The shares of Common Stock issued upon exercise are subject to certain restrictions on transfer and
repurchase by EMC upon certain events which lapse on the fifth anniversary of the grant date. Discounts from fair value have been recorded as deferred
compensation and are being amortized over a five-year vesting period; however, in the event that certain performance-related criteria are met, the vesting
accelerates.
In 2002, performance-related options to purchase 2,063,000 shares of Common Stock were granted at $7.70 per share, the fair market value on the date
of grant, to certain employees. The options vest ratably over five years; however, in the event that certain performance-related criteria are met, the vesting
accelerates.
In 2001, options to purchase 402,000 shares of Common Stock with an exercise price of $.01 per share were granted to certain employees. Discounts
from fair market value have been recorded as deferred compensation and are being amortized over the three-year vesting periods of the options.
In 2001, performance-related options to purchase 3,497,000 shares of Common Stock were granted at $36.66 per share, the fair market value on the date
of grant, to certain employees. The options vest ratably over five years; however, in the event that certain performance-related criteria are met, the vesting
accelerates.
We have a stock option plan that provides for the grant of stock options to members of our Board of Directors (the "Directors Plan"). A total of
14.4 million shares of Common Stock have been reserved for issuance under the Directors Plan. The exercise price for each option granted under the
Directors Plan will be at a price per share determined at the time the option is granted, but not less than 50% of the fair market value of Common Stock on the
date of grant.
At December 31, 2003, there was an aggregate of approximately 41.4 million shares available for issuance pursuant to future option grants under the
1985 Plan, the 1993 Plan, the 2001 Plan, the 2003 Plan and the Directors Plan. Except as noted above, options generally become exercisable in annual
installments over a period of three to five years after the date of grant and expire ten years after the date of grant.
We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future
grants under any of such plans.
94
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activity under all stock option plans for the three years ended December 31, 2003 is as follows (shares in thousands):
Number of
Shares
Wtd. Avg.
Exercise
Price
Outstanding, January 1, 2001 104,682 $ 29.01
Options relating to business acquisitions 46 8.28
Granted 84,701 22.69
Canceled (13,687) 40.52
Exercised (24,118) 3.55
Outstanding, December 31, 2001 151,624 28.50
Granted 52,414 7.24
Canceled (21,857) 30.99
Exercised (4,581) 4.25
Outstanding, December 31, 2002 177,600 22.56
Options relating to business acquisitions 53,804 9.30
Granted 37,132 12.71
Canceled (7,555) 27.83
Exercised (6,407) 6.19
Outstanding, December 31, 2003 254,574 $ 18.56
Summarized information about stock options outstanding at December 31, 2003 is as follows (shares in thousands):
Exercisable
Range of
Exercise Price
Number of Options
Outstanding
Weighted Avg.
Remaining
Contractual Life
Weighted Avg.
Exercise Price
Number of
Options
Weighted Avg.
Exercise Price
$0.01 - $4.12 12,196 4.4 $ 2.46 10,266 $ 2.45
4.13 - 9.27 79,531 7.6 6.15 32,027 6.27
9.28 - 13.91 94,718 8.0 12.15 32,583 11.55