Dell 2005 Annual Report Download - page 54

Table of Contents
preferred stock as Series A Junior Participating Preferred Stock ("Junior Preferred Stock") and reserved such shares for issuance upon
exercise of the Preferred Share Purchase Rights. The Preferred Share Purchase Rights expired on November 29, 2005, and Dell's Board of
Directors eliminated the previously designated and reserved shares on February 1, 2006. At February 3, 2006 and January 28, 2005, no shares
of Junior Preferred Stock were issued or outstanding.
Common Stock
Authorized Shares — As of February 3, 2006, Dell is authorized to issue seven billion shares of common stock, par value $.01 per share.
Share Repurchase Program — Dell has a share repurchase program that authorizes it to purchase shares of common stock in order to both
distribute cash to stockholders and manage dilution resulting from shares issued under Dell's equity compensation plans. However, Dell does
not currently have a policy that requires the repurchase of common stock in conjunction with share-based payment arrangements. As of
February 3, 2006, Dell's share repurchase program authorized the purchase of up to 1.5 billion shares of common stock at an aggregate cost
not to exceed $30 billion. Dell expects to repurchase shares of common stock through a systematic program of open market purchases. As of
the end of fiscal 2006, Dell had cumulatively repurchased 1.4 billion shares for an aggregate cost of approximately $25.6 billion. During fiscal
2006, Dell repurchased 204 million shares of common stock for an aggregate cost of $7.2 billion.
Preferred Share Purchase Rights
In December 1995, Dell distributed a dividend of one Preferred Share Repurchase Right (a "Right") for each outstanding share of common
stock. Dell issued shares of common stock with accompanying Preferred Share Purchase Rights until the rights expired on November 29, 2005.
NOTE 5 — Benefit Plans
Stock Plans — Dell has the following four employee stock plans (collectively referred to as the "Stock Plans") under which options and
restricted stock were outstanding as of February 3, 2006:
• The Dell Computer Corporation 1989 Stock Option Plan (the "1989 Option Plan")
• The Dell Computer Corporation Incentive Plan (the "1994 Incentive Plan")
• The Dell Computer Corporation 1998 Broad-Based Stock Option Plan (the "1998 Broad-Based Plan"), and
• The Dell Computer Corporation 2002 Long-Term Incentive Plan (the "2002 Incentive Plan")
The Stock Plans are administered by the Compensation Committee of Dell's Board of Directors.
The 1989 Option Plan, the 1994 Incentive Plan, and the 1998 Broad-Based Plan have been terminated (except for options previously granted
under those plans that are still outstanding). Consequently, awards are currently only being made under the 2002 Incentive Plan.
The 2002 Incentive Plan provides for the granting of stock-based incentive awards to Dell's employees, non-employee directors, and certain
consultants and advisors to Dell. Awards may be either incentive stock options within the meaning of Section 422 of the Internal Revenue
Code, nonqualified options, or restricted stock. The right to purchase shares pursuant to existing stock option agreements typically vests pro-
rata at each option anniversary date over a five-year period. The options, which are generally granted with option exercise prices equal to the
fair market value of Dell shares on the date of grant must be exercised within ten years from the date of grant. Dell has not issued any options
to consultants or advisors to Dell since fiscal 1999.
There were 272 million, 291 million, and 327 million options to purchase Dell's common stock available for future grants under the Stock Plans
as of February 3, 2006, January 28, 2005, and 51