NetFlix 2007 Annual Report Download - page 70

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Under the Company’s ESPP, employees may purchase common stock of the Company through accumulated
payroll deductions. The purchase price of the common stock acquired by the employees participating in the ESPP
is 85% of the closing price on either the first day of the offering period or the last day of the purchase period,
whichever is lower. Through May 1, 2006, offering periods were twenty-four months, and the purchase periods
were six months. Therefore, each offering period included four six-month purchase periods, and the purchase
price for each six-month period was determined by comparing the closing prices on the first day of the offering
period and the last day of the applicable purchase period. In this manner, the look-back for determining the
purchase price was up to twenty-four months. However, effective May 1, 2006, the ESPP was amended so that
offering and purchase periods take place concurrently in consecutive six month increments. Under the amended
ESPP, therefore, the look-back for determining the purchase price is six months. Employees may invest up to
15% 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 the years
ended December 31, 2007, 2006 and 2005, employees purchased approximately 205,416, 378,361 and 349,229
shares at average prices of $18.43, $9.84 and $8.09 per share, respectively. Cash received from purchases under
the ESPP for the years ended December 31, 2007, 2006 and 2005 was $3.8 million, $3.7 million and $2.8
million, respectively. As of December 31, 2007, 2,630,931 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. In November 2007, the 1997 Stock Plan expired and, as a result, there were no
shares reserved for future issuance upon the exercise of outstanding options under the 1997 Stock Plan as of
December 31, 2007.
In February 2002, the Company adopted the 2002 Stock Plan, which was amended and restated in May
2006. 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. As of
December 31, 2007, 3,994,866 shares were reserved for future issuance under the 2002 Stock Plan.
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