Citrix 2006 Annual Report Download - page 18

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• In connection with its investigation, the members of
our Audit Committee met both telephonically and
in-person numerous times and the Chairman of
the Audit Committee communicated with the Audit
Committee’s counsel on a frequent basis; and
• Engaging outside consultants to conduct various
analyses of our option grants.
Historical Stock Option Granting Practices
Prior to January 1, 2006, we accounted for our stock option
grants under APB No. 25 and had provided the required
disclosures pursuant to the provisions of Statement
of Financial Accounting Standards, or SFAS, No. 123,
Accounting for Stock-Based Compensation . On January 1,
2006, we adopted SFAS No. 123R, Share-Based
Payment, under the modified prospective method. For the
measurement date revisions we have made, we revised
our historical pro forma footnote disclosures in accordance
with SFAS No. 123. Additionally, we adjusted our 2006
consolidated financial statements to reflect the impact of
any revised measurement dates on the compensation cost
recognized in accordance with SFAS No. 123R.
As permitted by the terms of our various stock plans
(as amended and restated from time to time), the
Compensation Committee of our Board of Directors
was vested with the authority to administer and grant
stock options under the plans. Until November 2003,
all employee stock option grants were required to be
approved by the Compensation Committee. Beginning
in November 2003 and continuing to the present, the
Compensation Committee delegated authority, subject to
specific parameters, to our Chief Executive Officer and our
Chief Financial Officer to grant options to non-executive
employees. Grants to Section 16 Officers, to employees
whose compensation was subject to Section 162(m) of the
of the Internal Revenue Code of 1986, as amended, or the
IRC, and other grants outside of the parameters discussed
below continued to require Compensation Committee
approval in order to complete the required granting actions.
In the restatement, for grants requiring Compensation
Committee approval, we generally determined that
Compensation Committee approval was likely obtained
at the next in-person meeting after the date of grant. This
conclusion was based on the fact that Compensation
Committee members recall signing consents in person
at board meetings, that members of management
recalled that it was our objective to present consents to
the Committee at in-person meetings, that the consents
contained in our records typically contain all signatures
on a single page (consistent with having been signed
in person), and that the available meta-data for such
consents generally indicated that the consent forms were
available for signature at that time. We generally used the
in-person board meeting dates when determining revised
measurement dates, because members of management
responsible for approval and processing of these grants
believed or acted as if approval was an important and
required granting action for all grants that were not
subject to the delegation of authority described below.
For example, managers involved in processing grants:
(i) said that they typically refrained from correcting grants
approved by the Committee without further Committee
action; but (ii) believed that alteration or correction of grant
recipient and amount lists prior to Committee approval
was permitted (and performed such corrections and
alterations and did not consider them to be modifications);
and (iii) believed Committee approval was necessary to
grant options. There was some evidence that signatures
were sometimes solicited at such meetings for consents
previously signed and transmitted by fax or other means
but because we did not retain these earlier obtained
consents there was little evidence to indicate for which
grants these approvals were obtained and when they were
received. Where meta-data or other evidence led us to
conclude that approval was not complete at the next in
person meeting, we relied on the other evidence to select
a later date.
From December 1995 through December 2006, the
exercise price for all grants was typically set at the closing
price of our common stock on the original intended grant
date. During this period, we made the following types of
grants of stock options to employees, including officers,
and members of our Board of Directors:
• Annual grants in conjunction with our annual merit
review process, which generally occurred a few
months following our fiscal year end (referred to as
annual grants).