Nutrisystem 2005 Annual Report Download - page 58

11. STOCK OPTIONS AND WARRANTS
Stock Option Plan
The Company has two stock option plans, the 1999 Equity Incentive Plan and 2000 Equity Incentive Plan.
Under these plans, a variety of equity investments can be offered including incentive and nonqualified stock
options to purchase shares of the Company’s common stock and shares of common stock can be granted to key
employees. The 1999 Equity Incentive Plan and the 2000 Equity Incentive Plan authorize up to 1,000,000 and
5,100,000 shares of common stock , respectively, for issuance. At December 31, 2005, options to purchase
145,100 shares were available for grant under these plans.
In June 2000, the Company also adopted the 2000 Equity Incentive Plan for Outside Directors and
Consultants (the “Director Plan”) under which a variety of equity investments are offered including nonqualified
stock options to purchase shares of the Company’s common stock or shares of common stock can be granted to
non-employee directors and consultants to the Company. The Director Plan authorizes up to 1,500,000 shares of
common stock for issuance. At December 31, 2005, 711,660 shares were available for grant under this plan.
Under each of the plans, the Board of Directors determines the term of each option, but no option can be
exercisable more than ten years from the date the option is granted. To date, all of the options issued under the
Equity Incentive Plans expire ten years from the issue date and all of the options issued under the Director Plan
expire between three months and ten years from the issue date. The Board also determines the option exercise
price per share and vesting provisions. Options issued to employees generally vest over a three year period.
The following table summarizes the options granted, exercised and cancelled in 2003, 2004 and 2005:
Number of
Shares
Average Exercise
Price
Outstanding, January 1, 2003 ................................. 2,456,500 1.91
Granted .................................................. 2,866,000 0.74
Exercised ................................................ (127,666) 0.46
Cancelled ................................................ (357,667) 3.72
Outstanding, December 31, 2003 .............................. 4,837,167 1.12
Granted .................................................. 1,481,834 2.39
Exercised ................................................ (982,159) 0.60
Cancelled ................................................ (198,666) 1.81
Outstanding, December 31, 2004 .............................. 5,138,176 1.56
Granted .................................................. 501,900 11.83
Exercised ................................................ (2,786,070) 1.49
Cancelled ................................................ (121,169) 0.80
Outstanding, December 31, 2005 .............................. 2,732,837 3.55
The following table summarizes information about stock options outstanding as of December 31, 2005:
Range of Exercise
Prices
Number of
Shares
Average Remaining
Life (Years)
Average Exercise
Price
$ 0.33 – $ 0.99 ........................... 1,057,560 7.3 $ 0.57
$ 1.00 – $ 1.99 ........................... 293,371 6.9 $ 1.75
$ 2.00 – $ 2.99 ........................... 875,006 8.8 $ 2.59
$ 3.00 – $ 9.99 ........................... 290,000 8.3 $ 6.40
$10.00 – $19.99 ........................... 75,000 8.0 $14.97
$20.00 – $31.99 ........................... 141,900 9.7 $23.57
2,732,837 8.0 $ 3.55
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