Adobe 2009 Annual Report Download - page 111

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
111
(*) The intrinsic value is calculated as the market value as of end of the fiscal year. As reported by the NASDAQ Global
Select Market, the market value as of November 27, 2009 and November 28, 2008 was $35.38 and $23.16, respectively.
Grants to Non-Employee Directors
The Directors Plan (and starting in fiscal 2008, the 2003 Plan) provides for the granting of nonqualified stock options to
non-employee directors. Prior to fiscal 2009, option grants were limited to 25,000 shares per person in each fiscal year,
except for a new non-employee director to whom 50,000 shares were granted upon election as a director. Options granted
before November 29, 2008 vest over four years: 25% on the day preceding each of our next four annual meetings and have a
ten-year term. Starting in fiscal 2009, the initial equity grant to a new non-employee director is a restricted stock unit award
having an aggregate value of $0.5 million as based on the average stock price over the 30 calendar days ending on the day
before the date of grant. The initial equity award vests over 2 years, 50% on the day preceding each of our next 2 annual
meetings. For the annual equity grant, a non-employee director can elect to receive 100% options, 100% restricted stock units
or 50% of each and shall have an aggregate value of $0.2 million as based on the average stock price over the 30 calendar
days ending on the day before the date of grant. The target grant value of restricted stock units to stock options will be based
on a 3:1 conversion ratio. Annual equity awards granted on or after November 29, 2008 vest 100% on the day preceding the
next annual meeting. Options granted on or after November 29, 2008 have a seven-year term. The exercise price of the
options that are issued is equal to the fair market value of our common stock on the date of grant.
Options granted to directors for fiscal 2009, 2008 and 2007 are as follows (shares in thousands):
2009
2008
2007
Options granted to existing directors ....................
175
250
250
Exercise price ......................................
$
23.28
$
37.09
$
42.61
Restricted stock units granted to directors for fiscal 2009 are as follows (shares in thousands):
2009
Restricted stock units granted to existing directors ...............................................
27
Restricted stock units granted to new directors ..................................................
20
Compensation Costs
With the exception of performance shares, stock-based compensation expense is recognized on a straight-line basis over
the requisite service period of the entire award, which is generally the vesting period. For performance shares, expense is
recognized on a straight-line basis over the requisite service period for each vesting portion of the award.
As of November 27, 2009, there was $305.0 million of unrecognized compensation cost, adjusted for estimated
forfeitures, related to non-vested stock-based awards which will be recognized over a weighted average period of 2.4 years.
Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.