Salesforce.com 2011 Annual Report Download - page 85

Notes. The Note Hedges are separate transactions and are not part of the terms of the Notes. Holders of the Notes
will not have any rights with respect to the Note Hedges. The Company in January 2010 recorded a deferred tax
asset of $51.4 million in connection with these Note Hedges.
Warrants
Separately, the Company in January 2010 also entered into warrant transactions (the “Warrants”), whereby
the Company sold warrants to acquire, subject to anti-dilution adjustments, up to 6.7 million shares of the
Company’s common stock at a strike price of $119.51 per share. The Company received aggregate proceeds of
$59.2 million from the sale of the Warrants. If the average market value per share of the Company’s common
stock for the reporting period, as measured under the Warrants, exceeds the strike price of the Warrants, the
Warrants will have a dilutive effect on the Company’s earnings per share. The Warrants are separate transactions,
entered into by the Company and are not part of the terms of the Notes or Note Hedges. Holders of the Notes and
Note Hedges will not have any rights with respect to the Warrants.
3. Stockholders’ Equity
Stock Options Issued to Employees
The Company maintains three stock plans; the 2004 Equity Incentive Plan, 2004 Employee Stock Purchase
Plan and the 2004 Outside Directors Stock Plan. These plans, other than the 2004 Outside Directors Stock Plan,
provide for annual automatic increases on February 1 to the shares reserved for issuance based on the lesser of
(i) a specific percentage of the total number of shares outstanding at year end; (ii) a fixed number of shares; or
(iii) a lesser number of shares set by the Company’s Board of Directors, all as specified in the respective plans.
The expiration of the 1999 Stock Option Plan in fiscal 2010 did not affect awards outstanding, which continue to
be governed by the terms and conditions of the 1999 Plan.
On February 1, 2011, 3.5 million additional shares were reserved under the 2004 Equity Incentive Plan
pursuant to the automatic increase. The 2004 Employee Stock Purchase Plan will not be implemented unless and
until the Company’s Board of Directors authorizes the commencement of one or more offerings under the plan.
No offering periods have been authorized to date.
In April 2006, the Company’s Board of Directors approved the 2006 Inducement Equity Incentive Plan (the
“Inducement Plan”) that allows for stock option and other equity incentive grants to employees in connection
with merger or acquisition activity. In fiscal 2011, the Board of Directors amended the Inducement Plan to
increase the share reserve by 300,000 shares to 1,000,000 shares in total. As of January 31, 2011, there were
362,102 shares of common stock available for grant under the Inducement Plan.
Prior to February 1, 2006, options issued under the Company’s stock option plans were generally for periods
which had a term of 10 years. After February 1, 2006, options issued have a term of 5 years.
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