Adaptec 2007 Annual Report Download - page 83

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Table of Contents
expected term of options granted is derived from the output of the stock option valuation model and represents the period of time that granted options are
expected to be outstanding. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the
time of the grant.
The fair values of the Company’s stock option and ESPP awards were estimated using the following weighted average assumptions:
Stock Options:
December 30,
2007
December 31,
2006
December 31,
2005
Expected life (years) 4.1 3.9 3.8
Expected volatility 61% 58% 60%
Risk-free interest rate 4.5% 4.8% 3.9%
Employee Share Purchase Plan:
December 30,
2007
December 31,
2006
December 31,
2005
Expected life (years) 1.3 1.3 1.3
Expected volatility 50% 50% 53%
Risk-free interest rate 4.7% 4.9% 3.5%
Stock Option Plans
The Company issues its common stock under the provisions of various stock option plans. Stock option awards are granted with an exercise price equal to the
closing market price of the Company’s common stock at the grant date. The options generally expire within five to ten years and vest over four years.
In 2001, the Company simplified its plan structure. The 2001 Stock Option Plan (the “2001 Plan”) was created to replace a number of stock option plans the
Company had assumed in connection with mergers and acquisitions completed prior to 2001. The number of shares available for issuance under the 1994
Incentive Stock Plan (“1994 Plan”) were approved by stockholders. New stock options or other equity incentives may only be issued under the 1994 Plan and the
2001 Plan. In the second quarter of 2006 the Company assumed the stock option plans and all outstanding stock options of Passave as part of the merger
consideration.
77
Source: PMC SIERRA INC, 10-K, February 22, 2008