NetFlix 2005 Annual Report Download - page 85

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data and percentages)
As of December 31, 2005, 3,969,491 shares were reserved for future issuance under the 2002 Stock Plan.
Options generally expire in 10 years, however, they may be limited to five years if the optionee owns stock
representing more than 10 percent of the Company. 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. Prior to
the third quarter of 2003, the vesting periods generally provided for options to vest over three to four years.
During the third quarter of 2003, the Company began granting fully vested options on a monthly basis.
A summary of the activities related to the Company’s options is as follows:
Options Outstanding
Shares
Available
for Grant
Number of
Shares
Weighted-
Average
Exercise
Price
Balances as of December 31, 2002 ............. 1,821,946 8,201,060 $ 1.71
Authorized ............................ 2,000,000 — —
Granted ............................... (705,030) 705,030 $16.78
Exercised ............................. — (2,657,934) $ 1.86
Canceled .............................. 351,572 (351,572) $ 2.24
Balances as of December 31, 2003 ............. 3,468,488 5,896,584 $ 3.42
Authorized ............................ 2,000,000 — —
Granted ............................... (1,447,940) 1,447,940 $22.04
Exercised ............................. — (1,298,308) $ 2.87
Canceled .............................. 230,464 (230,464) $10.20
Balances as of December 31, 2004 ............. 4,251,012 5,815,752 $ 7.91
Authorized ............................ 2,000,000 — —
Granted ............................... (1,741,319) 1,741,319 $15.30
Exercised ............................. — (1,629,115) $ 6.22
Canceled .............................. 73,140 (73,140) $19.68
Balances as of December 31, 2005 ............. 4,582,833 5,854,816 $10.43
Options exercisable as of December 31:
2003 ................................. 3,367,308 $ 4.21
2004 ................................. 4,845,243 $ 8.97
2005 ................................. 5,673,167 $10.65
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