NetFlix 2005 Annual Report Download - page 84

NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data and percentages)
Voting Rights
The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted
upon by the Company’s stockholders.
Employee Stock Purchase Plan
In February 2002, the Company adopted the 2002 Employee Stock Purchase Plan, which reserved a total of
1,166,666 shares of common stock for issuance. The 2002 Employee Stock Purchase Plan also provides for
annual increases in the number of shares available for issuance on the first day of each year, beginning with
2003, equal to the lesser of:
• 2 percent of the outstanding shares of the common stock on the first day of the applicable year;
• 666,666 shares; and
• such other amount as the Company’s Board of Directors may determine.
Under the 2002 Employee Stock Purchase Plan, shares of the Company’s common stock may be purchased
over an offering period with a maximum duration of two years at 85 percent of the lower of the fair market value
on the first day of the applicable offering period or on the last day of the six-month purchase period. Employees
may invest up to 15 percent of their gross compensation through payroll deductions. In no event shall an
employee be permitted to purchase more than 8,334 shares of common stock during any six-month purchase
period. During 2004 and 2005, employees purchased 495,455 and 349,229 shares at average prices of $4.67 and
$8.09 per share, respectively. As of December 31, 2005, 1,881,376 shares were available for future issuance
under the 2002 Employee Stock Purchase Plan.
Stock Option Plans
In December 1997, the Company adopted the 1997 Stock Plan, which was amended and restated in October
2001. The 1997 Stock Plan provides for the issuance of stock purchase rights, incentive stock options or
non-statutory stock options. 643,884 remaining shares reserved but not yet issued under the 1997 Stock Plan as
of the effective date of the Company’s initial public offering were added to the total reserved shares under the
2002 Stock Plan and deducted from the total reserved shares under the 1997 Stock Plan. As of December 31,
2005, 613,342 shares were reserved for future issuance under the 1997 Stock Plan.
In February 2002, the Company adopted the 2002 Stock Plan. The 2002 Stock Plan provides for the grant of
incentive stock options to employees and for the grant of non-statutory stock options and stock purchase rights to
employees, directors and consultants. The Company reserved a total of 1,333,334 shares of common stock for
issuance under the 2002 Stock Plan. 643,884 remaining shares reserved but not yet issued under the 1997 Stock
Plan as of the effective date of the Company’s initial public offering were added to the total reserved shares of
1,333,334 under the 2002 Stock Plan and deducted from the total reserved shares under the 1997 Stock Plan. In
addition, the Company’s 2002 Stock Plan provides for annual increases in the number of shares available for
issuance on the first day of each year, beginning with 2003, equal to the lesser of:
• 5 percent of the outstanding shares of common stock on the first day of the applicable year;
• 2,000,000 shares; and
• such other amount as the Company’s Board of Directors may determine.
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