NetFlix 2002 Annual Report Download - page 73

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NETFLIX, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Years Ended December 31, 2000, 2001 and 2002
(in thousands, except share, per share and per DVD data)
Options generally expire in 10 years, however, they may be limited to 5 years if the optionee owns stock representing more than 10% of the Company. Vesting periods are determined by the
stock plan administrator and generally provide for shares to vest ratably over three or four years.
Generally, the Company’s Board of Directors grants options at an exercise price of not less than the fair value of the Company’s common stock at the date of grant. In 2001, the Company
offered its employees the right to exchange certain employee stock options. The exchange resulted in the cancellation of employee stock options to purchase 0.9 million shares of common
stock with varying exercise prices in exchange for 0.9 million employee stock options with an exercise price of $3.00. The option exchange resulted in variable award accounting treatment
for all of the exchanged options. Variable award accounting will continue until all options subject to variable accounting are exercised, cancelled or expired.
A summary of the activities related to the Company’s options for the years ended December 31, 2000, 2001 and 2002 and is as follows:
Shares Available for Grant
Options Outstanding
Number of Shares Weighted−Average
Exercise Price
Balances as of January 1, 2000 611,313 531,031 $ 4.041
Authorized 587,284 — —
Granted (849,466) 849,466 9.378
Exercised — (81,003) 5.229
Canceled 160,475 (160,475) 7.545
Repurchased 26,653 — 5.310
Balances as of December 31, 2000 536,259 1,139,019 7.443
Authorized 3,133,333 — —
Granted (3,457,659) 3,457,659 3.204
Exercised — (30,046) 4.146
Canceled 1,567,159 (1,567,159) 7.335
Repurchased 5,625 — —
Balances as of December 31, 2001 1,784,717 2,999,473 2.982
Authorized 666,667 — —
Granted (1,770,143) 1,770,143 4.090
Exercised — (441,083) 2.969
Canceled 228,003 (228,003) 3.649
Repurchased 1,729 —
Balances as of December 31, 2002 910,973 4,100,530 $ 3.424
Options exercisable as of December 31:
2000 185,684 $ 3.750
2001 918,252 $ 2.937
2002 1,288,533 $ 2.980
F−21