Adobe 2002 Annual Report Download - page 126

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95
Performance and Restricted Stock
The 1994 Performance and Restricted Stock Plan (“the Restricted Stock Plan”) provides for the granting of
restricted stock and/or performance awards to officers and key employees. As of November 29, 2002, we had
reserved 8.0 million shares of our common stock for issuance under the Plan.
Restricted shares issued under the Restricted Stock Plan generally vest annually over two to three years but are
considered outstanding at the time of grant, as the stockholders are entitled to dividends and voting rights. As of
November 29, 2002, 82,714 shares were outstanding and not yet vested. In fiscal 2002, 2001, and 2000, we granted
9,321; 56,146; and 453,885 shares of restricted stock, respectively, and the weighted average fair value of the shares
was $27.88, $39.44, and $58.66, respectively. Additionally, we charged $6.8 million, $18.0 million, and $16.5
million to expense associated with restricted stock in fiscal 2002, 2001, and 2000, respectively. As of November 29,
2002, approximately 2.8 million shares were available for grant under this Plan.
Performance awards issued under the Restricted Stock Plan entitle the recipient to receive, at our discretion,
shares or cash upon completion of the performance period subject to attaining identified performance goals.
Performance awards are generally measured over a three-year period and cliff vest at the end of the three-year
period. We accrue the projected value of these awards and charge this amount to expense over the three-year
performance period. We did not grant performance awards in fiscal 2002, 2001 or 2000. As of November 29, 2002
and November 30, 2001, there were no performance awards outstanding.
The 1999 Plan also provides for the granting of restricted stock and/or performance awards to employees,
although no awards of this type have been made under the 1999 Plan to date.
The Restricted Stock Plan will continue until the earlier of (i) termination by the Board or (ii) the date on which
all of the shares available for issuance under the plan have been issued and restrictions on issued shares have lapsed.
Employee Stock Purchase Plan
Our 1997 Employee Stock Purchase Plan (the “ESPP”) allows eligible employee participants to purchase
shares of our common stock at a discount through payroll deductions. For offerings commencing before September
2000, the ESPP consisted of twelve-month offerings with two six-month purchase periods in each offering period; in
September 2000, the ESPP was amended to increase the offering periods for offerings commencing after that date to
twenty-four-month offering periods with four six-month purchase periods in each offering period. As of January 1,
2001, all employees participating in the ESPP have twenty-four-month offering periods. Employees purchase shares
in each purchase period at 85% of the market value of our common stock at either the beginning of the offering
period or the end of the purchase period, whichever price is lower. As of November 29, 2002, we had reserved 38.0
million shares of our common stock for issuance under the ESPP, and approximately 15.4 million shares remain
available for future issuance.
The weighted average fair value of the purchase rights granted in fiscal 2002, 2001, and 2000 were $11.59,
$22.91, and $21.34, respectively.
The ESPP will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the
shares available for issuance under the plan have been issued.
Cash Incentive Awards
We grant Cash Incentive Awards (“CIAs”), a form of phantom stock, to designated key employees to reward
them based on their contributions to a project. The cash value of the CIA is structured to mirror our Restricted Stock
Plan. The CIAs, which we grant to designated employees, generally vest annually over a three-year period. Upon
each vest date, the employee is paid the market value of the stock on the date of vest multiplied by the number of
vested shares. We charged approximately $0.4 million, $(2.5) million, and $12.8 million to CIA expense for shares
vested in fiscal 2002, 2001 and 2000, respectively. All existing CIAs were fully vested in fiscal 2002, and we
currently do not intend to grant CIAs in the future.