Citrix 2006 Annual Report Download - page 22

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During this period, a substantial majority of the grants were
approved using unanimous written consent forms signed
by the Compensation Committee for which, in most cases,
there was no documentary evidence of when approval
was actually obtained. As discussed above, where there
was insufficient evidence to determine when approval
conclusively was obtained, we generally used the date
of the first in-person Board of Directors meeting after the
evidence suggested that the amount and terms of the grant
were final as determined by management as the revised
measurement date for financial accounting purposes.
However, if there was evidence sufficient for us to conclude
that the required granting actions were completed on
a date that was earlier than the next in-person Board
meeting, in accordance with APB No. 25, we set the
revised measurement date at the earlier date.
November 2003 – December 2006: Beginning in November
2003, we granted 9.5 million options to employees on 42
grant dates pursuant to delegated authority described
above. In virtually all cases these grants were made on
predetermined annual grant dates or the first business
day of the month following the employee’s hire date or
performance recognition and were issued pursuant to an
underlying system of processes, controls and management
approvals. After the award was communicated to the
employee and the administrative processes were complete
the CFO signed an internal delegation of authority form
after the grant date. We concluded that the CFO’s
signature on these documents was perfunctory and
was not a required granting action. During this period,
approximately 3% of the individual non-executive employee
grants (or 7% of the total non-executive employee options)
awarded pursuant to the delegation process exceeded
the delegation limitations discussed above and should
have been presented for approval by the Compensation
Committee. Although these grants were not approved by
the Compensation Committee, they were communicated
to employees and processed pursuant to the same system
of processes, controls and management approvals as
grants within the limitations. We have concluded that these
grants were legally outstanding and that the requirements
to establish a measurement date were met on the original
grant date.
We revised the measurement date for the non-executive
annual grant originally dated April 1, 2004. The grant was
issued pursuant to the delegation of authority above and
was revised because we had not completed the process
of determining grant amounts and recipients until after
the grant date. We determined revised measurement
dates for each individual recipient through May 20, 2004
by assessing when each grant was fixed with finality as
reflected in hard copy and electronic documents and other
information. This was the only grant date that options
issued under delegated authority were revised and we
recognized total pre-tax stock compensation expense of
approximately $0.2 million related to this grant.
Compensation Committee approval continued to be a
required granting action for all stock option grants outside
of the parameters of the delegated authority, as described
above. For grants outside of the delegation of authority,
the Compensation Committee typically approved such
grants at a meeting or by unanimous written consent form.
During this period, the Compensation Committee approved
2.6 million options on 19 grant dates. We determined
that for seven of these grant dates, the original grant
date differed from the appropriate measurement date for
financial accounting purposes. We recorded approximately
$32,000 in pre-tax stock-based compensation expense
related to these grants. The last grant for which we revised
the measurement date was March 1, 2005.
Board Grants. From 1996 through 2006, we made 48
grants to non-employee directors on 21 grant dates for a
total of 3.1 million options. We revised the measurement
dates for certain of these grants because they were
awarded on dates other than the automatic dates
prescribed in the applicable stockholder plan and in
amounts that differed nominally from the formulas set forth
in the plan. We recognized approximately $0.5 million in
pre-tax stock-based compensation expense related to the
following grants:
• We awarded to non-employee directors an
aggregate of 0.7 million options on five grant dates
between 1998 and 2002. Instead of awarding
these options on the anniversary date of the
directors’ appointment to the Board, they were
awarded on the first day of the month containing
the directors’ anniversary date, in error. These