Adobe 2003 Annual Report Download - page 85

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expense over the three-year performance period. We did not grant performance awards in fiscal 2003, 2002
or 2001. As of November 28, 2003 and November 29, 2002, 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. The ESPP consists of
twenty-four-month offering periods with four six-month purchase periods in each offering period.
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 28, 2003, we had reserved 38.0 million shares of our common stock for issuance under the
ESPP, and approximately 14.2 million shares remain available for future issuance.
The weighted average fair value of the purchase rights granted in fiscal 2003, 2002 and 2001 were
$10.98 million, $11.59 and $22.91, 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 and $(2.5) million
for shares vested (forfeited) in fiscal 2002 and 2001, respectively. There was no charge in fiscal 2003. All
existing CIAs were fully vested in fiscal 2002, and we currently do not intend to grant CIAs in the future.
Stock Appreciation Rights
Under the 2003 Plan, we are authorized to grant Stock Appreciation Rights (“SARs”), a form of
phantom stock, to designated key employees based on their performance. Additionally, we grant SARs to
employees in certain countries outside of the U.S. in lieu of stock options, generally with similar vesting
schedules to our option vesting schedule; these SARs generally expire eight years after the grant date. The
1999 Plan also provides for the granting of stock appreciation rights to employees, although no awards of
this type have been made under the 1999 Plan to date.
The performance-based SARs generally vest four years from the date of grant but contain an
acceleration feature that allows for a two-year vesting period based on Adobe achieving predetermined
performance goals. These performance-based SARs expire five years from the date of grant. Under our
SAR plan, designated employees are awarded rights that are equal to one share of Adobe’s common stock
for each right awarded with an exercise price based on the fair market value on the grant date. When the
award vests, employees generally have the right to exercise the award and receive the then-current value in
cash of the appreciation from the exercise price of the exercised number of rights of our common stock. We
did not award any SARs in fiscal 2003, 2002 and 2001. We charged approximately $0.1 million, $0.01
million and $(0.5) million to expense in fiscal 2003, 2002 and 2001, respectively. We currently do not
intend to grant SARs in the future, except to certain employees outside of the U.S. in lieu of stock options.