Adobe 2014 Annual Report Download - page 89

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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
89
NOTE 12. STOCK-BASED COMPENSATION
Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide
incentives for talented employees, officers and directors, and to align stockholder and employee interests. We have the following
stock-based compensation plans and programs:
Restricted Stock Unit Plans
We grant restricted stock units to all eligible employees under our 2003 Equity Incentive Plan, as amended (“2003 Plan”),
and our 2005 Equity Incentive Assumption Plan (“2005 Assumption Plan”). Restricted stock units granted under these plans as
part of our annual review process vest annually over three years. Other restricted stock units granted under these plans generally
vest over four years, the majority of which vest 25% annually. Certain grants have other vesting periods approved by our Board
of Directors or an authorized committee of the Board of Directors.
We grant performance awards to officers and key employees under our 2003 Plan. Performance awards granted under these
plans from fiscal 2009 to fiscal 2012 vest annually over three years, and performance awards granted in fiscal 2013 and 2014 cliff-
vest after three years. Performance awards granted prior to fiscal 2009 vest annually over four years.
As of November 28, 2014, we had reserved 163.2 million and 5.7 million shares of common stock for issuance under our
2003 Plan and 2005 Assumption Plan, respectively, and had 45.7 million and 28.6 million shares available for grant under our
2003 Plan and 2005 Assumption Plan, respectively.
Employee Stock Purchase Plan
Our 1997 Employee Stock Purchase Plan (“ESPP”) allows eligible employee participants to purchase shares of our common
stock at a discount through payroll deductions. The ESPP consists of a twenty-four month offering period 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. 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.
As of November 28, 2014, we had reserved 93.0 million shares of our common stock for issuance under the ESPP and
approximately 12.9 million shares remain available for future issuance.
Stock Option Plans
The 2003 Plan and the 2005 Assumption Plan allows us to grant options to all employees, including executive officers,
outside consultants and non-employee directors. These plans 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. Option vesting periods are generally four years for all of these plans. Options granted under these plans generally expire
seven years from the effective date of grant.
The Executive Compensation Committee of Adobe’s Board of Directors eliminated the use of stock option grants for all
employees in fiscal 2012. Stock option grants to non-employee directors were minimal in fiscal 2013, and in December 2013 the
Board of Directors eliminated the use of options for directors going forward.
Performance Share Programs
On January 24, 2014, our Executive Compensation Committee approved the 2014 Performance Share Program, including
the award calculation methodology, under the terms of our 2003 Equity Incentive Plan. Under our 2014 Performance Share Program
(“2014 Program”), shares may be earned based on the achievement of an objective relative total stockholder return measured over
a three-year performance period. The purpose of the 2014 Program is to help focus key employees on building stockholder value,
provide significant award potential for achieving outstanding company performance and enhance the ability of Adobe to attract
and retain highly talented and competent individuals. Performance share awards will be awarded and fully vest upon the Executive
Compensation Committee’s certification of the level of achievement following the three-year anniversary of the grant date on
January 24, 2017. Participants in the 2014 Program generally have the ability to receive up to 200% of the target number of shares
originally granted.