Plantronics 1998 Annual Report Download - page 24

P.16
ANNUAL REPORT . 199 8
PLANTRONICS
Notes TO CONSOLIDATED
FINANCIAL STATEMENTS
FAIR VALUE DISCLOSURES
All options in fiscal 1996, 1997 and 1998 were granted at an exercise price equal to the fair market value of the
Company’s Common Stock at the date of grant. The weighted average fair value at date of grant for options granted
during 1996, 1997 and 1998 were $5.43, $6.34 and $9.79 per share, respectively. The fair value of options at date
of grant was estimated using the Black-Scholes model with the following assumptions for 1996; dividend yield of 0%,
an expected life of 5 years, expected volatility of 24% and risk free interest rates of 5.9%. For 1997 the assumptions
were; dividend yield of 0%, an expected life of 5 years, expected volatility of 17% and risk free interest rates of 6.6%.
For 1998 the assumptions were; dividend yield of 0%, an expected life of 5 years, expected volatility of 28% and
risk free interest rates of 5.6%.
Had compensation expense for the Company’s stock-based compensation plans been determined based on the methods
prescribed by SFAS No. 123, the Company’s net income and net income per share would have been as follows:
FISCAL YEAR ENDED MARCH ,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)199 6 1997 1998
Net income:
As reported $25,470 $29,671 $39,189
Pro forma $25,390 $29,044 $37,381
Net income per share:
As reported $ 1.42 $ 1.67 $ 2.15
Pro forma $ 1.41 $ 1.63 $ 2.05
EMPLOYEE STOCK PURCHASE PLAN
On April 23, 1996 the Board of Directors of the Company approved the 1996 Employee Stock Purchase Plan, (the “ESPP”)
which was approved by the stockholders on August 6, 1996, to provide certain employees with an opportunity to
purchase Common Stock through payroll deductions. The plan is a qualified plan under applicable IRS guidelines
and certain highly compensated employees are excluded from participation. Under the ESPP, the purchase price of
the Common Stock will equal 95% of the market price of the Common Stock immediately before the beginning of the
applicable participation period. Each participation period is 6 months long. Once purchased the shares are restricted
for 6 months. During fiscal 1997, 581 shares were issued under the plan. The fair value of the employee’s purchase
rights was estimated using the Black-Scholes model with the following assumptions; dividend yield of 0%, an expected
life of 6 months, expected volatility of 17%, and risk free interest rates of 6.6%. The weighted-average fair value of
these purchase rights granted in fiscal 1997 was $2.27. During fiscal 1998, 2,021 shares were issued under the plan.
The fair value of the employee’s purchase rights was estimated using the Black-Scholes model with the following
assumptions; dividend yield of 0%, an expected life of 6 months, expected volatility of 28%, and risk free interest
rates of 5.6%. The weighted-average fair value of these purchase rights granted in fiscal 1998 was $4.85.
SENIOR EXECUTIVE STOCK OWNERSHIP PLAN
In November, 1996 the Board of Directors approved a Senior Executive Stock Purchase Plan, effective January 1, 1997,
to encourage ownership of the Company’s Common Stock by senior executives. This is a voluntary plan in which
executives are encouraged to participate and achieve a target ownership over a 5 year period in annual increments of
20% or more. The target ownership is equal to two times the Chief Executive Officer’s base salary and one times the
individual Vice Presidents’ base salary. To encourage participation, the Company’s Treasury Stock will be sold by the
Company to executives under this voluntary purchase program. The price will be equal to the greater of: 95% of the
price set by the Board of Directors on an annual basis or 85% of the fair market value of the stock on the date of
transaction. The various vehicles that are available to executives to obtain ownership of the Company’s stock are as
follows: 401(K) Plan contributions, personal IRA account purchases, Deferred Compensation Plan contributions, outright
purchase of stock or exercising and holding vested stock options. The discounted price is not applicable to exercising
and holding of vested stock options.