Dell 1997 Annual Report Download - page 40

reduction of 25% to reflect the probability of forfeiture due to
termination of employment prior to vesting and the probability of a
shortened option term due to termination of employment prior to the option
expiration date. The ultimate values of the options will depend on the
future market prices of the common stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, that an optionee will
recognize upon exercise of an option will depend on the difference between
the market value of the common stock on the date the option is exercised
and the applicable exercise price.
(c) These options were granted as a part of the ESOIP, which is described
below. These options were fully vested when granted but were not
exercisable until the first anniversary of the date of grant. These options
were received in lieu of fiscal 1997 annual bonuses in the following
amounts: Mr. Topfer, $1,031,622 (100%); Mr. Meredith, $545,232 (100%); and
Mr. Kelly, $151,682 (40%). Those amounts are shown in the Bonus column of
the "Summary Compensation Table" above.
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The following table sets forth, for each Named Executive Officer, information
concerning the exercise of stock options during fiscal 1998 and the value of
unexercised stock options at the end of fiscal 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(B)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Mr. Dell............. 0 $ 0 832,000 6,048,000 $36,214,480 $200,467,820
Mr. Topfer........... 1,241,000 37,519,304 0 3,698,388 0 163,012,986
Mr. Rollins.......... 408,000 13,921,321 128,000 2,544,000 5,786,558 102,532,852
Mr. Meredith......... 620,000 19,910,401 472,670 1,134,990 22,126,660 49,392,046
Mr. Kelly............ 28,000 734,414 250,376 543,916 11,309,826 22,043,709
---------------
(a) Calculated using the difference between (1) the actual sales price of the
underlying shares (if the underlying shares were sold immediately upon
exercise) or the closing sales price of the common stock on the date of
exercise (if the underlying shares were not sold immediately upon exercise)
and (2) the exercise price.
(b) Amounts were calculated by multiplying the number of unexercised options by
the closing sales price of the common stock on the last trading day of
fiscal 1998 ($49.72) and subtracting the exercise price.
Under the ESOIP, which is a program implemented under the Incentive Plan,
certain members of the Company's management (including the executive officers)
may elect, on an annual basis, to receive stock options in lieu of all or a
portion of the annual bonus that they would otherwise receive. The exercise
price of the options is 80% of the fair market value of the Company's common
stock on the date of issuance. The number of shares subject to the options is
dependent on the amount of bonus a participant designates for the program and is
calculated by dividing the designated bonus amount by 20% of the fair market
value of the common stock on the date of issuance. For the first two years of
the program (fiscal 1996 and fiscal 1997), the options were fully vested at the
time of issuance but were not exercisable for a period of one year. Effective
for fiscal 1998, the options are subject to a one-year vesting period and do not
vest and become exercisable until the first anniversary of the date of grant.
All decisions regarding participation in the program and the amount of bonus to
designate must be made several months in advance of the anticipated bonus
payment date. With respect to fiscal 1998, 240 persons (including four of the
Named Executive Officers) elected to participate in the program with respect to
their bonuses for such year.
401(k) Retirement Plan -- The Company maintains a defined contribution
retirement plan that complies with the provisions of Section 401(k) of the
Internal Revenue Code. Substantially all U.S. employees are eligible to
participate in the plan, and eligibility for participation commences upon
hiring. Under the terms of the plan, the Company currently matches 100% of each
employee participant's voluntary contributions, subject to a maximum Company
contribution of 3% of the employee's compensation. The Company's matching
contributions are used to purchase the Company's common stock and vest at the
rate of 20% on each of the first five anniversaries of the date of hire. After
the completion of five years of service with the Company, a participant may
elect to transfer the portion of his or her funds held in the form of common
stock to another available investment fund. During fiscal 1998, the Company made
a discretionary contribution for every eligible employee, regardless of whether
the employee was a plan participant, equal to 2% of the employee's actual