Citrix 2006 Annual Report Download - page 20

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one grant date where the grant was approved by our Board
of Directors in conjunction with the acquisition; however,
we had not completed the required granting actions by the
stated grant date and the measurement date was revised
to the date that the evidence indicated that we completed
our allocation.
We also grant options to the non-employee members of
our Board of Directors, or the Board Grants, pursuant to a
stockholder approved plan, as amended from time to time.
The timing of the grant date and amount of such awards
was granted pre-determined pursuant to a formula set
forth either in the terms of the plan or via board resolution.
Certain Board Grants were issued on a date other than the
automatic grant date prescribed by the plan or differed by
nominal amounts from the option amount pre-determined
by the plan formula.
Prior to the restatement discussed below, we used the
grant dates as set forth above as the measurement date
for financial accounting purposes. Accordingly, in each
case the exercise price did not exceed the closing stock
price of our common stock on that date, and we did not
record stock-based compensation expense in connection
with these grants. In the restatement, we revised the
measurement dates for many grants and recorded
stock-based compensation expense when the revised
measurement date resulted in intrinsic value which we
accounted for in the restatement.
Adjustments to Measurement Dates Arising from Errors
Identified by Audit Committee Investigation
Based on the facts obtained as a result of the Audit
Committee’s investigation, we identified certain grants for
which we used an incorrect measurement date for financial
accounting purposes, as defined under Generally Accepted
Accounting Principles in the United States, or GAAP. To
determine the correct measurement dates for these grants
under applicable accounting principles, we followed the
guidance in APB No. 25, which deems the “measurement
date” to be the first date on which all of the following
are known with finality: (1) the identity of the individual
employee who is entitled to receive the option grant; (2) the
number of options that the individual employee is entitled to
receive; and (3) the option’s exercise price.
We completed a grant date by grant date analysis of
approximately 191 option grant dates during the relevant
period for compliance with APB No. 25. Each individual
grant on each grant date was evaluated based on its
particular facts and circumstances. Where we determined
that we did not complete the required granting actions by
the original grant date, we used judgment to determine
corrected measurement dates consistent with what the
evidence suggested was our practice or process or other
information obtained as part of the investigation that
suggested the date upon which all requirements for a
measurement date had been satisfied under applicable
accounting principles. If the measurement date was not
the same date we used previously, we made accounting
adjustments as required, which resulted in stock-based
compensation and related tax effects when an option had
intrinsic value on the revised measurement date.
The documents and information considered in connection
with the measurement date adjustments that we have
made included, but was not limited to:
• minutes of Board of Directors and Compensation
Committee meetings and related presentations;
• unanimous written consents signed by the
Compensation Committee members, and evidence
relating to the date such consents were created
and circulated for signature and/or signed;
• information contained in personnel files maintained
for employees who were granted options;
• electronic mail messages and other electronic files
retrieved from our computer system and in back
up media;
• documentation prepared in connection with our
annual performance reviews of employees as part
of the process of determining the allocation of
stock option grants to individual employees;
• information as to the date of hire of the employee
receiving the option grant, including (if the grant
was a new hire grant) the date of any offer letter;
• correspondence, memoranda and other
documentation supporting the option grant;