Oracle 2009 Annual Report Download - page 211

EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS
(USD $)
12 Months Ended
05/31/2010
EMPLOYEE BENEFIT PLANS 14. EMPLOYEE BENEFIT PLANS
Stock-based Compensation Plans
Stock Option Plans
In fiscal 2001, we adopted the 2000 Long-Term Equity Incentive Plan (the 2000 Plan), which replaced the 1991 Long-Term
Equity Incentive Plan (the 1991 Plan) and provides for the issuance of non-qualified stock options and incentive stock
options, as well as stock purchase rights, stock appreciation rights and long-term performance awards to our eligible
employees, officers, and directors who are also employees or consultants, independent consultants and advisers. Under the
terms of the 2000 Plan, options to purchase common stock generally are granted at not less than fair market value, become
exercisable as established by the Board (generally 25% annually over four years under our current practice), and generally
expire no more than ten years from the date of grant. Options granted under the 1991 Plan were granted with similar terms. If
options outstanding under the 1991 Plan are forfeited, repurchased, or otherwise terminate without the issuance of stock, the
shares underlying such options will also become available for future awards under the 2000 Plan. As of May 31, 2010, options
to purchase 301 million shares of common stock were outstanding under both plans, of which 144 million were vested.
Approximately 197 million shares of common stock were available for future awards under the 2000 Plan. To date, we have
not issued any stock purchase rights, stock appreciation rights, restricted stock-based awards or long-term performance
awards under the 2000 Plan.
In fiscal 1993, the Board adopted the 1993 Directors' Stock Option Plan (the Directors' Plan), which provides for the issuance
of non-qualified stock options to non-employee directors. The Director's Plan has from time to time been amended and
restated. In fiscal 2010, the Director's Plan was further amended to increase the amounts of annual stock option grants to the
Chair of the Compensation Committee of the Board. Under the terms of the Directors' Plan, options to purchase 8 million
shares of common stock were reserved for issuance, options are granted at not less than fair market value, become exercisable
over four years, and expire no more than ten years from the date of grant. The Directors' Plan provides for automatic grants of
options to each non-employee director upon first becoming a director and thereafter on an annual basis, as well as automatic
nondiscretionary grants for chairing certain Board committees. The Board has the discretion to replace any automatic option
grant under the Directors' Plan with awards of restricted stock, restricted stock units or other stock-based awards. The number
of shares subject to any such stock award will be no more than the equivalent value of the options, as determined on any
reasonable basis by the Board, which would otherwise have been granted under the applicable automatic option grant. The
Board will determine the particular terms of any such stock awards at the time of grant, but the terms will be consistent with
those of options, as described below, granted under the Directors' Plan with respect to vesting or forfeiture schedules and
treatment on termination of status as a director. At May 31, 2010, options to purchase approximately 3 million shares of
common stock were outstanding under the 1993 Directors' Plan, of which approximately 2 million were vested.
Approximately 2 million shares are available for future option awards under this plan of which a lesser portion than the total
may be used for grants other than options.
In connection with certain of our acquisitions, including Sun, BEA, PeopleSoft, Siebel and Hyperion, we assumed all of the
outstanding stock options and other stock awards of each acquiree's respective stock plans. These stock options and other
stock awards generally retain all of the rights, terms and conditions of the respective plans under which they were originally
granted. As of May 31, 2010, options to purchase 48 million shares of common stock and 4 million shares of restricted stock
were outstanding under these plans.
The following table summarizes stock option activity for our last three fiscal years ended May 31, 2010:
Options Outstanding
(in millions, except exercise price) Shares
Under
Option
Weighted
Average
Exercise
Price
Balance, May 31, 2007 434 $ 13.65
Granted 61 $ 20.49
Assumed 36 $ 17.24
Exercised (135) $ 9.12
Canceled (18) $ 20.83
Balance, May 31, 2008 378 $ 16.37
Granted 69 $ 20.53
Assumed 1 $ 6.54
Exercised (76) $ 9.31
Canceled (13) $ 25.14
Balance, May 31, 2009 359 $ 18.32
Granted 72 $ 21.23
Assumed 23 $ 55.77
Exercised (60) $ 14.03
Canceled (42) $ 43.93
Balance, May 31, 2010 352 $ 18.84
Options outstanding that have vested and that are expected to vest as of May 31, 2010 are as follows:
Outstanding
Options
(in millions)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract
Term
(in years)
In-the-Money
Options as of
May 31, 2010
(in millions)
Aggregate
Intrinsic
Value (1)
(in millions)
Vested 192 $ 17.44 4.24 172 $ 1,372
Expected to
vest(2) 145 $ 20.44 8.15 140 340
Total 337 $ 18.73 5.93 312 $ 1,712
(1) The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2010 of
$22.57 and the exercise prices for all in-the-money options outstanding, excluding tax effects.
(2) The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected
forfeitures) as of May 31, 2010 was approximately $709 million and is expected to be recognized over a weighted average period of 2.56 years.
Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠