Autodesk 2006 Annual Report Download - page 89

Stock Compensation
As of January 31, 2006, we maintained two active stock option plans for the purpose of granting stock options
to employees and members of Autodesk’s Board of Directors: the 1996 Stock Plan (available only to employees)
and the 2000 Directors’ Option Plan (available only to non-employee directors). Additionally, there are six expired
or terminated plans with options outstanding, including the Nonstatutory Stock Option Plan (available only to
non-executive employees and consultants) which was terminated by the Board of Directors in December 2004.
On November 10, 2005, our stockholders approved a new stock plan, the 2006 Employee Stock Plan, as well as
amendments to the 2000 Directors’ Option Plan. (See Item 4. “Submission of Matters to a Vote of Security
Holders,” for voting results of these proposals). The 2006 Employee Stock Plan reserves 9.65 million shares of
Autodesk common stock, plus the shares that remained available for issuance under the 1996 Stock Plan upon
its expiration, for issuance under the plan. The 2006 Employee Stock Plan, which will expire in fiscal year 2009,
is limited to grants of stock options to employees. The 2006 Employee Stock Plan replaced the 1996 Plan on
March 21, 2006.
In addition to its stock option plans, our employees are also eligible to participate in Autodesk’s 1998
Employee Qualified Stock Purchase Plan.
Our stock option program is broad-based and designed to promote long-term retention. Essentially all of
our employees participate. Approximately 85% of the options we granted during fiscal 2006 were awarded to
employees other than our CEO and the four other most highly compensated officers for fiscal 2005, which we
refer to as our Named Executive Officers. Options granted under our equity plans during fiscal 2006 vest over
periods ranging from one to four years and expire within six to ten years of the date of grant. Options granted
prior to fiscal 2006 expire within ten years of the date of grant. The exercise price of the stock options is equal
to the closing price of our Common Stock on the Nasdaq National Market on the grant date.
All stock option grants to executive officers are made by the Compensation and Human Resources
Committee of the Board of Directors. All members of the Compensation and Human Resources Committee are
independent directors, as defined by the listing standards of the Nasdaq National Market. Grants to our
non-employee directors are non-discretionary and are pre-determined by the terms of the 2000 Directors’
Option Plan.
For further information concerning Autodesk’s policies and procedures regarding the use of stock options,
see (a) “Policies Related to our Equity Compensation Programs” in the Proxy Statement for our Special Meeting
of Stockholders which was held on November 10, 2005, and (b) “Report of the Compensation and Human
Resources Committee of the Board of Directors” in the Proxy Statement for our 2005 Annual Meeting
of Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
Our revenues, earnings and cash flows are subject to fluctuations due to changes in foreign currency
exchange rates. Our risk management strategy utilizes foreign currency forward and option contracts to manage
our foreign currency exposures that exist as part of our ongoing business operations, but such contracts do not
extend beyond the current quarter. Contracts are primarily denominated in euro, Swiss Franc, Canadian dollar,
British pounds and Japanese yen. We do not enter into any foreign exchange derivative instruments for trading
or speculative purposes.
A sensitivity analysis, performed on our hedging portfolio as of January 31, 2006, indicated that a
hypothetical 10% appreciation of the U.S. dollar from its value at January 31, 2006 would increase the fair value
of our forward exchange and option contracts by $5.5 million. Conversely, a hypothetical 10% depreciation of
the dollar from its value at January 31, 2006 would decrease the fair value of our forward exchange and option
contracts by $2.2 million. The results of the sensitivity analysis performed on our hedging portfolio as of January 31,
2005, indicated that a hypothetical 10% appreciation of the U.S. dollar from its value at January 31, 2005 would
have increased the fair value of our forward exchange and option contracts by $8.0 million and a hypothetical
2006 Annual Report
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