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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock-Based Benefit Plans
Share Option Plan —In December 2000, the Company’s board of directors adopted the Seagate Technology 2001 Share Option Plan (the
“Seagate Technology Option Plan”). Under the terms of the Seagate Technology Option Plan, eligible employees, directors, and consultants
can be awarded options to purchase common shares of the Company under vesting terms to be determined at the date of grant. In January 2002,
the Seagate Technology Option Plan was amended to increase the maximum number of common shares issuable under the Seagate Technology
Option Plan from 72 million to 100 million. No options to purchase the Company’s common shares had been issued through June 29, 2001.
From July 1, 2001 through July 2, 2004, options to purchase 90,985,690 common shares were granted to employees under this share option
plan, net of cancellations. Options granted to exempt employees will generally vest as follows: 25% of the shares will vest on the first
anniversary of the vesting commencement date and the remaining 75% will vest proportionately each month over the next 36 months. Options
granted to non-exempt employees will vest on the first anniversary of the vesting commencement date. Options granted under the Seagate
Technology Option Plan were granted at fair market value and expire ten years from the date of grant. The following is a summary of stock
option activity for the Seagate Technology Option Plan:
Options exercisable at the end of fiscal year 2004 were approximately 29,085,700 at a weighted average exercise price of $3.56. Options
exercisable at the end of fiscal year 2003 were approximately 26,545,585 at a weighted average exercise price of $2.49. Options exercisable at
the end of fiscal year 2002 were approximately 23,154,473 at a weighted average exercise price of $2.30.
Deferred Stock Compensation —In connection with certain stock options granted in fiscal year 2003, the Company recorded deferred
stock compensation totaling $10.7 million, representing the difference between the exercise price of the options and the deemed fair value of
the Company’s common shares on the dates the options were granted. This deferred stock compensation is being amortized over the vesting
periods of the underlying stock options of 48 months. Through July 2, 2004, the Company has amortized approximately $5 million of such
compensation expense.
77
Options Outstanding
Number of
Shares
Weighted
Average Price
per Share
Shares
Available for
Future Grants
(number of shares in millions)
Balance June 29, 2001
—
—
100.0
Granted
80.5
2.73
(80.5
)
Exercised
(2.3
)
2.30
—
Cancelled
(6.2
)
2.33
6.2
Balance June 28, 2002
72.0
2.78
25.7
Granted
17.3
10.09
(17.3
)
Exercised
(12.5
)
2.38
—
Cancelled
(3.7
)
3.40
3.7
Balance June 27, 2003
73.1
4.55
12.1
Granted
4.6
22.04
(4.6
)
Exercised
(15.7
)
2.69
—
Cancelled
(1.6
)
5.70
1.6
Balance July 2, 2004
60.4
$
6.33
9.1