Autodesk 2007 Annual Report Download - page 96

36
Accounting Adjustments
Consistent with the applicable accounting literature and recent guidance from the SEC staff, we
organized the 230 separate stock option grant approvals, totaling approximately 46,300 individual grants,
made during the relevant period into categories based on grant type and the processes by which the grant
approval was finalized. We analyzed the evidence from the Audit Committee’s review related to each
category including, but not limited to, physical documents, electronic documents, underlying electronic
data about documents, and witness interviews. Based on the relevant facts and circumstances, we applied
the then appropriate accounting standards to determine, for every grant within each category, the proper
measurement date. If the measurement date was not the originally assigned grant date, accounting
adjustments were made as required, resulting in stock-based compensation expense and related tax
effects. After accounting for forfeitures, we recognized stock-based compensation expense of $34.8
million on a pre-tax basis over the vesting terms for the affected grants. No adjustments were required for
the remaining grants. The adjustments were determined by category as follows:
Monthly Date Selection Process Grants — For the period between July 2000 and February 2005, we
generally followed an administrative process for monthly broad based employee grants that resulted in
the selection of effective grant dates that were prior in time to the final preparation of action by written
consent for such grants (the “Monthly Date Selection Process Grants”). Usually, the grant dates selected
by this process were chosen later in the same calendar month in which the applicable actions by written
consent were signed and were dates prior in time to the final preparation of such written consents to
coincide with low trading prices during the month of the applicable grant. Based on the voluntary review,
the Company determined that the measurement dates for approximately 12,000 individual grants of
the approximate total 18,500 individual grants made to broad based employees pursuant to delegated
authority must be revised because the grant dates selected by the administrative process were prior in
time to the final approval of such grants. For these grants, based upon the available evidence we chose
as the measurement date the date upon which the terms of the specific monthly broad based employee
grant was determined to be fixed and unchangeable. Accordingly, we recognized a pre-tax stock-based
compensation expense of $23.1 million for such grant approvals using the intrinsic value method of
accounting under Accounting Principles Board Opinion No. 25 (“APB 25”).
1992 New-Hire Grant to Incoming CEO — In May 1992, the Compensation Committee approved a grant
to the Company’s then-incoming CEO that was measured on an incorrect date. The measurement date
used was April 7, 1992, the date the Company and the incoming CEO had reached a business agreement
on most of the terms of her employment agreement, including the number of stock options to be granted.
However, discussions thereafter continued regarding other important matters, including the structure
of, and exercise price for, her stock option grant. The essential terms of the option grant, the grant price,
number of options and date of grant, were presented to the Board on April 27, 1992, and approved by
the Compensation Committee on May 4, 1992. In connection with the grant to the then-incoming CEO,
both parties were represented by counsel. We recognized pre-tax stock-based compensation expense of
$3.3 million from this grant based on a revised measurement date of May 4, 1992 using the intrinsic value
method of accounting under APB 25.
Anomalous Add Grants — Based on the voluntary review, the Audit Committee found that in
certain instances, additions or error corrections were made to the details of grants that had already been
approved by the CEO without obtaining additional approval (the “Anomalous Add Grants”). For the period
between December 1995 through August 2006 when the CEO had delegated authority to grant options,
420 of approximately 37,100 individual option grants were considered to be Anomalous Add Grants, for
a total error rate of 1.1%, with 98% of Anomalous Add Grants occurring prior to fiscal 2003. Based on the
voluntary review, management determined that the measurement dates for the related individual option
grants must be revised. Accordingly, we recognized pre-tax stock-based compensation expense of $3.1
million from such grants using the intrinsic value method of accounting under APB 25.