Citrix 2006 Annual Report Download - page 66



made the following types of grants of stock options to
employees, including officers and members of its Board
of Directors:
• Annual grants in conjunction with the Company’s
annual merit review process, which generally
occurred a few months following the Company’s
fiscal year end (referred to as annual grants).
• Non-annual grants to newly hired and promoted
employees and from time to time to officers in
recognition of performance or as incentives.
Beginning January 2004, the Company replaced
promotion grants with performance grants that
were granted to employees upon recommendation
by their manager for recognition (new hire and
performance, incentive or promotion grants are
referred to collectively as non-annual grants).
• Options granted or assumed in connection
with acquisitions.
• Options granted to non-employee members of the
Company’s Board of Directors.
From December 1995 through mid-1998, all employee
grants required approval by the Compensation Committee
to complete the required granting actions. In addition, the
Company did not have a defined process for determining
the date on which the Company made grants and no
granting pattern could be established for grants made
during this period. Following the investigation, the Audit
Committee concluded that the Company likely set grant
dates retrospectively for many stock options granted
to employees and executives during the 1996 to
mid-1998 period.
Beginning in mid-1998 through late 2003, all employee
grants required approval by the Compensation Committee
to complete the required granting actions. During this
period, the Company made changes in its stock option
granting practices which included implementing a practice
where the Company typically dated non-annual grants
to non-executives on the first business day of the month
following the start or promotion date, unless that date was
the first day of the month, in which case the grant date
would be that date. The Company dated non-annual new
hire and promotion grants to executives either on their
start date or the first business day of the month following
the start date or the promotion date; it awarded the
incentive grants on an ad hoc basis. During this period,
the Company made annual grants to executive and non-
executive employees on dates that were typically previously
discussed with the Compensation Committee. Until 2002,
annual grants were generally made in July or August of
each year pursuant to a merit evaluation process. However,
during these earlier discussions, the Compensation
Committee did not approve the terms and allocation of
grants to individual recipients or delegate to management
the authority to do so without further action by the
Compensation Committee. Beginning in 2002, annual
grants were split into two grant dates in March and August.
During this period all employee grants required approval
by the Compensation Committee to complete the required
granting actions and for most grants the Company did
not obtain approval from the Compensation Committee,
typically on unanimous written consent forms, until after
the grant date and for certain grants, the Company had
not completed the process of identifying the recipients or
number of options to be granted until after the grant date.
Beginning in November 2003, the Compensation
Committee delegated its authority to the Company’s Chief
Executive Officer and Chief Financial Officer to issue stock
options pursuant to specific parameters. The delegation
provided authority to grant no more than 4 million stock
options per year in the aggregate and to grant up to
10,000 options per year to any employee who was not an
officer subject to Section 16 of the Securities Exchange
Act of 1934, as amended, and whose compensation was
not subject to Section 162(m) of the Internal Revenue
Code of 1986 as amended, or the IRC. In July 2004 the
Compensation Committee increased that number to
20,000 options per employee per year. The delegation was
also subject to other parameters, including that each grant
be consistent in number with guidelines that provided the
range of grants that could be awarded to each employee
grade. Compensation Committee approval continued to be
a required granting action for all stock option grants outside
of the parameters of the delegated authority. For grants
outside of the delegation of authority, the Compensation
Committee often approved such grants at a meeting or
by unanimous written consent form. In some cases the