EMC 2005 Annual Report Download - page 90

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
of our common stock on the date of grant. Incentive stock options will expire no later than ten years after the date of grant. Restricted stock is common stock
that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Restricted stock units represent the right to
receive shares of common stock in the future, with the right to future delivery of the shares subject to a risk of forfeiture or other restrictions that will lapse
upon satisfaction of specified conditions. Awards of restricted stock or restricted stock units that vest only by the passage of time will not vest fully in less
than three years after the date of grant. The 2003 Plan allows us to grant up to 200.0 million shares of common stock, no more than 60.0 million shares which
may be issued pursuant to awards of restricted stock or restricted stock units.
In addition to the 2003 Plan, we have three employee stock option plans (the "1985 Plan", the "1993 Plan", and the "2001 Plan"). Under the terms of
each of the three plans, the exercise price of incentive stock options issued must be equal to at least the fair market value of our common stock on the date of
grant. In the event that non-qualified stock options are granted under the 1985 Plan, the exercise price may be less than the fair market value at the time of
grant, but in the case of employees not subject to Section 16 of the Exchange Act, not less than par value which is $.01 per share, and in the case of employees
subject to Section 16, not less than 50% of the fair market value on the date of grant. In the event that non-qualified stock options are granted under the 1993
Plan or the 2001 Plan, the exercise price may be less than the fair market value at the time of grant but not less than par value.
A total of 748.0 million shares of common stock have been reserved for issuance under the four above plans.
In 2005 and 2004, a respective aggregate of 20,190,764 and 4,660,000 shares of restricted stock and restricted stock units were granted to certain
employees, consultants and Directors under the 2003 Plan. The weighted-average grant-date fair value of the restricted stock and restricted stock unit grants
were $14.06 in 2005 and $12.66 in 2004. These awards have various vesting terms including pro rata vesting over 3 years, cliff vesting at the end of 3 or 5
years from the date of grant with acceleration for achieving specified performance criteria and cliff vesting on various dates, contingent on achieving specified
performance criteria.
The grants have been recorded as deferred compensation on the balance sheet and are being amortized over the vesting periods of the awards.
In 2003, options to purchase 75,000 shares of common stock with an exercise price of $.01 per share were granted to an employee. The options were
exercisable on the date of grant and were exercised. The shares of common stock issued upon exercise are subject to certain restrictions on transfer and
repurchase by EMC upon certain events which lapse on the fifth anniversary of the grant date. Discounts from fair value have been recorded as deferred
compensation and are being amortized over a five-year vesting period; however, in the event that certain performance-related criteria are met, the vesting
accelerates. As of December 31, 2005, 50,000 shares have vested.
In 2002, performance-related options to purchase 2,063,000 shares of common stock were granted at $7.70 per share, the fair market value on the date
of grant, to certain employees. The options vest ratably over five years; however, in the event that certain performance-related criteria are met, the vesting
accelerates. As of December 31, 2005, 1,943,828 shares have vested.
We have a stock option plan that provides for the grant of stock options to members of our Board of Directors (the "Directors Plan"). A total of
14.4 million shares of common stock have been reserved for issuance under the Directors Plan. The exercise price for each option granted under the Directors
Plan will be at a price per share determined at the time the option is granted, but not less than 50% of the fair market value of common stock on the date of
grant.
At December 31, 2005, there was an aggregate of approximately 89.5 million shares available for issuance pursuant to future option grants under the
1985 Plan, the 1993 Plan, the 2001 Plan, the 2003 Plan and the Directors Plan. Except as noted above, options generally become exercisable in annual
installments over a period of three to five years after the date of grant and expire ten years after the date of grant.
We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future
grants under any of such plans.
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