Avid 2004 Annual Report Download - page 74

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The shares under the 2004 awards vest annually in 25% increments over the next four years. The shares under the 2000
awards vested 40% on the first anniversary and 60% on the second anniversary of the awards. The awards under the Stock
Option Exchange program vested annually over three years from the date of grant. Unvested restricted shares may not be
sold, transferred or assigned and are subject to forfeiture in the event that an employee ceases to be employed by the
Company.
The Company initially recorded, as a separate component of stockholders’ equity, deferred compensation of approximately
$1.1 million and $4.6 million in 2004 and 2000, respectively, with respect to the restricted stock under these programs.
The deferred compensation amounts for all restricted stock awards represent the fair value of the Company’s common stock
at the date of the award less par value, which represents the purchase price paid by the holders, and are recorded as
compensation expense ratably as the shares vest. For the years ended December 31, 2004, 2003 and 2002, $0.1 million,
$0.2 million and $1.0 million, respectively, was recorded as compensation expense related to these restricted stock
arrangements.
The Company generally allows employees to satisfy any withholding tax obligation under certain award plans by tendering
to the Company a portion of the common stock received under the award. During the year ended December 31, 2004, the
Company did not receive any shares to satisfy tax withholding obligations. During the years ended December 31, 2003 and
2002, the Company received approximately 6,332 shares and 53,000 shares, respectively, of its common stock for $0.2
million and $0.5 million, respectively, in connection with these non-cash transactions.
Warrant
In connection with the acquisition of Softimage Inc., the Company issued to Microsoft a ten-year warrant to purchase
1,155,235 shares of the Company’s common stock, valued at $26.2 million. The warrant became exercisable on August 3,
2000, at a price of $47.65 per share, and expires on August 3, 2008.
K. STOCK PLANS
Employee Stock Purchase Plan
The Company’s 1996 Employee Stock Purchase Plan, as amended through May 25, 2003, authorizes the issuance of a
maximum of 1,700,000 shares of common stock in quarterly offerings to employees at a price equal to 95% of the closing
price on the applicable offering termination date. As of December 31, 2004, 353,432 shares remain available for issuance
under this plan.
Stock Option and Award Plans
The Company has several stock-based compensation plans under which employees, officers, directors and consultants may
be granted stock awards or options to purchase the Company’s common stock generally at the fair market value on the date
of grant. Certain plans allow for options to be granted at below fair market value under certain circumstances. Options
become exercisable over various periods, typically two to four years for employees and immediately to four years for
officers and directors. The options have a maximum term of ten years. As of December 31, 2004, a maximum of
15,219,606 shares of common stock have been authorized for issuance under the Company’s stock-based compensation
plans, of which 1,474,151 shares remain available for future grants. Shares available for future grants at December 31,
2004 include 597,741 shares that can be issued as grants of restricted stock.
Information with respect to options granted under all stock option plans is as follows:
2004
2003
2002
Shares
Weighted
Average
Price
Per Share
Shares
Weighted
Average
Price
Per Share
Shares
Weighted
Average
Price
Per Share
Options outstanding at January 1,
4,233,477
$17.58
6,842,557
$14.46
7,093,183
$14.34
Granted, at fair value
869,786
$45.31
1,263,413
$25.43
1,289,187
$13.31
Granted, below fair value
345,202
$9.21
–
–
–
–
Exercised
(1,749,768)
$16.04
(3,614,122)
$14.41
(1,008,860)
$11.19