Autodesk 2010 Annual Report Download - page 30

the fair market value of the shares of Common Stock on the exercise date over the exercise price. Any additional
gain or loss recognized upon later disposition of the shares of Common Stock will be taxed as capital gain or
loss.
Incentive Stock Options. No taxable income is recognized when an incentive stock option is granted or
exercised (except for purposes of the alternative minimum tax, in which case taxation is the same as for
nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the
shares of Common Stock more than two years after the grant date and more than one year after the exercise date,
the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant
exercises the option and then later sells or otherwise disposes of the shares of Common Stock before the end of
the two- or one-year holding periods described above, he or she generally will have ordinary income at the time
of the sale equal to the fair market value of the shares of Common Stock on the exercise date (or the sale price, if
less) minus the exercise price of the option. Any additional gain or loss will be taxed as capital gain or loss.
Restricted Stock and Restricted Stock Units. A participant generally will not have taxable income upon grant
of restricted stock or restricted stock units. Instead, the participant will recognize ordinary income at the time of
vesting equal to the fair market value of the Shares on that date or the cash received minus any amount paid. For
restricted stock only, a participant instead may elect to be taxed at the time of grant.
Section 409A. Section 409A of the Code provides certain new requirements for non-qualified deferred
compensation arrangements with respect to an individual’s deferral and distribution elections and permissible
distribution events. Awards granted under the 2008 Plan with a deferral feature will be subject to the
requirements of Section 409A of the Code. If an award is subject to and fails to satisfy the requirements of
Section 409A of the Code, the recipient of that award may recognize ordinary income on the amounts deferred
under the award, to the extent vested, which may be prior to when the compensation is actually or constructively
received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions,
Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as
well as interest on such deferred compensation.
Tax Effect for the Company. The Company generally will be entitled to a tax deduction in connection with a
stock option award under the 2008 Plan in an amount equal to the ordinary income realized by a participant at the
time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). As
discussed above, special rules limit the deductibility of compensation paid to our Chief Executive Officer and
other “covered employees” as determined under Section 162(m) of the Code and applicable guidance. However,
the 2008 Plan has been designed to permit the Administrator to grant stock options that qualify as “performance-
based compensation” under Section 162(m) of the Code, thereby permitting the Company to receive a federal
income tax deduction in connection with such awards. Restricted stock units do not vest based on the attainment
of performance goals, and therefore the Company will not be permitted a federal income tax deduction in
connection with grants of restricted stock units to “covered employees.”
For more information about equity compensation plans approved by our stockholders, please see “Executive
Compensation—Equity Compensation Plan Information.”
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