Autodesk 2007 Annual Report Download - page 97

37
2007 Annual Report
Termination Issues — During the relevant period, two former executives and 34 employees were
permitted to vest in (and subsequently exercise) stock options to purchase an aggregate of approximately
1.4 million shares of common stock for a period of time beyond what they were otherwise entitled to
exercise under their original stock option agreement. In most cases, vesting was extended for a period
of time after the termination date and, thus, should have resulted in accounting consequences. For the
34 employees, it appears that these cases were most likely due to administrative error. Based on the
voluntary review, management determined that the accounting for the related option grants must be
revised and we recognized pre-tax stock-based compensation expense of $2.3 million from such grants
using the intrinsic value method of accounting under APB 25.
Board-Authorized Grant — In 1992, the Board approved a broad-based employee grant, which included
a grant to the Company’s then-CFO and then General Counsel, that involved a measurement date error.
The error was caused by the Company’s use of the date on which the Board approved the general scope
and nature of a special one-time grant to certain employees as the measurement date, rather than the
date on which the specific grantees and grant amounts were finalized and approved by the Board. In
addition, in 1991, the Board approved a broad-based employee grant with an exercise price less than the
fair market value on the date of grant. Accordingly, we recognized pre-tax stock-based compensation
expense of $2.4 million from these grants.
Compensation Committee Grants — From 1997 through 2000: (i) two individual option grants do not
appear to have any evidence of Compensation Committee approval or authorization; (ii) four additional
individual option grants appear to have been ratified at a date subsequent to the original grant date;
and (iii) the original measurement date of one additional option grant approved by a Unanimous Written
Consent of the Compensation Committee appears to have been made more than a reasonable period of time
prior to final approval of the grant for accounting purposes. Based on the voluntary review, management
determined that the measurement dates for the related option grants must be revised. Accordingly, we
recognized pre-tax stock-based compensation expense of $0.6 million from seven grants.
Judgment
In light of the judgment used in establishing revised measurement dates, alternate approaches to
those used by us could have resulted in different compensation expense charges than those recorded by
us in the restatement. We considered various alternative approaches.
For Monthly Date Selection Process Grants, where for certain of the grants, there was no evidence to
suggest a particular single date was the appropriate measurement date, Company management narrowed
the possible measurement date to a range of dates or a grant window. The grant window was approximately
four days on average and ranged from one day to sixteen days. The Company’s management considered
which date to use in this range and chose to use the last day of the grant window since the grants appeared
to be fixed and unchangeable. We believe the grant was fixed and unchangeable on the last day in the
grant window because this was the day the award was communicated. Changing the measurement dates
from the last day of the grant window to the highest price during the grant window would cause the
pre-tax compensation charges discussed above to increase by approximately $2.0 million. Changing the
measurement dates from the last day of the grant window to the lowest price during the grant window
would cause the pre-tax compensation charges discussed above to decrease by approximately $11.9
million.
For the Anomalous Add Grants, Company management determined that the measurement date was
the date the individual grant was fixed and unchangeable. This was the date by which the award was
likely communicated to the employee. Alternatively, we considered the date on which the employee and
relevant grant information were added to the grant list. However, because that date did not necessarily
represent a date that the award was either approved or communicated to the employee, we rejected that
alternative. We believe the grant was fixed and unchangeable on the last day in the grant window because