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11. Employee Stock Plans
Stock Incentive Plans
Our 1999 Stock Incentive Plan (the “1999 Plan”) serves as the successor to the 1998 Stock Plan (the “Predecessor Plan”).
The 1999 Plan became effective in June 1999. At that time, all outstanding options under the Predecessor Plan were transferred
to the 1999 Plan, and no further option grants can be made under the Predecessor Plan. All outstanding options under the
Predecessor Plan continue to be governed by the terms and conditions of the existing option agreements for those grants, unless
our compensation committee decides to extend one or more features of the 1999 Plan to those options.
As of December 31, 2008, the total number of shares authorized for issuance under the 1999 Plan approximated 7,571,583,
which amount includes an automatic annual increase to the share reserve of 3% of our outstanding common shares on the last
trading day in December. The automatic increase on January 1, 2008 was approximately 594,000 shares based upon 19,813,000
shares outstanding on the last day of 2007.
In no event will this annual increase exceed 782,358 shares. In addition, no participant in the 1999 Plan may be granted stock
options or direct stock issuances for more than 562,500 shares of common stock in total in any calendar year. Options granted
under the 1999 Plan generally vest 25% per year, and the Board of Directors has the discretion with respect to vesting periods
applicable to a particular grant. Each option granted has a 10 year contractual life. During 2008, 2007 and 2006, we issued
options to purchase approximately 528,000, 1.4 million and 318,500 shares of common stock, respectively, at prices at or above
the market price at the date of grant.
F-19
TABLE OF CONTENTS
STAMPS.COM INC.
NOTES TO FINANCIAL STATEMENTS
11. Employee Stock Plans – (continued)
A summary of stock option activity is as follows (in thousands, except per share amounts):
The weighted-average fair value of stock grants for 2008, 2007 and 2006 using the Black-Scholes valuation method are as
follows:
Options
Outstanding
Weighted
Average
Exercise Price
Number of
Options
Balance at December 31, 2005
2,608
$
15.03
Granted
319
27.53
Forfeited
(74
)
22.48
Exercised
(656
)
11.66
Balance at December 31, 2006
2,197
$
17.52
Granted
1,368
13.71
Forfeited
(342
)
18.86
Exercised
(132
)
7.05
Balance at December 31, 2007
3,091
16.17
Granted
528
11.36
Forfeited
(288
)
16.48
Exercised
(45
)
7.49
Balance at December 31, 2008
3,286
16.77