Netgear 2009 Annual Report Download - page 90

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Table of Contents
date of grant and (ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value
of the underlying stock on the date of grant. To date, options granted generally vest over four years, with the first tranche vesting at the end of 12
months and the remaining shares underlying the option vesting monthly over the remaining three years. In fiscal 2005, certain options granted
under the 2003 Plan immediately vested and were exercisable on the date of grant, and the shares underlying such options were subject to a
resale restriction which expires at a rate of 25% per year.
2006 Long Term Incentive Plan
In April 2006, the Company adopted the 2006 Long Term Incentive Plan (the “2006 Plan”), which was approved by the Company’s
stockholders at the 2006 Annual Meeting of Stockholders on May 23, 2006. The 2006 Plan provides for the granting of stock options, stock
appreciation rights, restricted stock, performance awards and other stock awards, to eligible directors, employees and consultants of the
Company. Upon the adoption of the 2006 Plan, the Company reserved 2,500,000 shares of common stock for issuance under the 2006 Plan. In
June 2008, the Company adopted amendments to the 2006 Plan which increased the number of shares of the Company’
s common stock that may
be issued under the 2006 plan by an additional 2,500,000 shares. As of December 31, 2009, 1,058,274 shares were reserved for future grants
under the 2006 Plan.
Options granted under the 2006 Plan may be either ISOs or NSOs. ISOs may be granted only to Company employees (including officers
and directors who are also employees). NSOs may be granted to Company employees, directors and consultants. Options may be granted for
periods of up to ten years, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than the estimated fair value of the
underlying stock on the date of grant and (ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of
the estimated fair value of the underlying stock on the date of grant. Options granted under the 2006 Plan generally vest over four years, with the
first tranche vesting at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years.
Stock appreciation rights may be granted under the 2006 Plan subject to the terms specified by the plan administrator, provided that the
term of any such right may not exceed ten (10) years from the date of grant. The exercise price generally cannot be less than the fair market
value of the Company’s common stock on the date the stock appreciation right is granted.
Restricted stock awards may be granted under the 2006 Plan subject to the terms specified by the plan administrator. The period over
which any restricted award may fully vest is generally no less than three (3) years. Restricted stock awards are non-vested stock awards that may
include grants of restricted stock or grants of restricted stock units. Restricted stock awards are independent of option grants and are generally
subject to forfeiture if employment terminates prior to the release of the restrictions. During that period, ownership of the shares cannot be
transferred. Restricted stock has the same voting rights as other common stock and is considered to be currently issued and outstanding.
Restricted stock units do not have the voting rights of common stock, and the shares underlying the restricted stock units are not considered
issued and outstanding. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the
shares at the date of grant, ratably over the period during which the restrictions lapse.
Performance awards may be in the form of performance shares or performance units. A performance share means an award denominated in
shares of Company common stock and a performance unit means an award denominated in units having a dollar value or other currency, as
determined by the plan administrator. The plan administrator will determine the number of performance awards that will be granted and will
establish the performance goals and other conditions for payment of such performance awards. The period of measuring the achievement of
performance goals will be a minimum of twelve (12) months.
Other stock-based awards may be granted under the 2006 Plan subject to the terms specified by the plan administrator. Other stock-based
awards may include dividend equivalents, restricted stock awards, or amounts
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