THQ 2006 Annual Report Download - page 76

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At March 31, 2006 we had accumulated foreign earnings of $32.1 million. We do not plan to repatriate
these earnings, therefore, no U.S. income tax has been provided on the foreign earnings. Additionally, we
have not tax effected the cumulative translation adjustment as we have no intention of repatriating foreign
earnings.
13.Employee Defined Contribution Plan
For our United States employees we sponsor a defined contribution plan under Section 401(k) of the
Internal Revenue Code. Commencing January 1, 2005 the plan was amended to allow employees the
ability to defer up to 60% of their annual compensation (up to the annual maximum amount allowable by
law). The plan also provides that we will make a matching contribution equal to each employee’s deferral,
up to 4% of eligible compensation. We may also contribute funds to the plan in the form of a discretionary
profit-sharing contribution. Employer contributions under the plan were $3.5 million, $2.7 million and
$1.7 million in the fiscal years ended March 31, 2006, 2005 and 2004, respectively.
14.Stock-based Compensation
As of March 31, 2006, we utilize two stock option plans: the THQ Inc. Amended and Restated 1997 Stock
Option Plan (the “1997 Plan”) and the THQ Inc. Third Amended and Restated Nonexecutive Employee
Stock Option Plan (the “NEEP Plan”). The 1997 Plan provides for the issuance of up to 14,357,500 shares
available for employees, consultants and non-employee directors, and the NEEP plan provides for the
issuance of up to 2,142,000 shares available for nonexecutive employees of THQ of which no more than
20% is available for awards to our nonexecutive officers and no more than 15% is available for awards to
the nonexecutive officers or general managers of our subsidiaries or divisions. As of March 31, 2006, we
had 2,007,949 shares under the 1997 Plan available for grant and 237,031 shares under the NEEP Plan
available for grant. On April 3, 2006 we granted 681,000 options to certain officers of THQ, reducing the
amount of options available for grant to 1,564,148. Information related to the April 3, 2006 option grant is
included in our 2006 Proxy Statement.
Stock options granted under the 1997 Plan may be incentive stock options or non-qualified stock options.
Stock options may be granted under the 1997 Plan to, in the case of incentive stock options, all employees
(including officers) of THQ; or, in the case of non-qualified stock options, all employees (including
officers), consultants and non-employee directors of THQ. Additionally, under the 1997Plan, the
Company may grant Performance Accelerated Restricted Stock (“PARS”) or Performance Accelerated
Restricted Stock Units (“PARSUs”) to officers and certain other high-level employees of the Company.
Other than the right to grant PARS and PARSUs, the NEEP Plan has primarily the same attributes as the
1997 Plan, but participation is reserved for employees who are not executive officers and only non-
qualified options may be granted.
The purchase price per share of common stock purchasable upon exercise of each option may not be less
than the fair market value of such share of common stock on the date that such option is granted.
Generally, options granted under these plans become exercisable over three years and expire on the fifth
anniversary of the grant date. PARS and PARSUs that have been granted to our officers under the 1997
Plan vest with respect to 100% of the shares subject to the award on the fifth anniversary of the grant date;
provided, however, 20% of the shares subject to each award will vest on each of the first through fourth
anniversaries of the grant date if certain performance targets for the Company are attained each fiscal
year. To date, no vesting of PARS or PARSUs has been accelerated. PARSUs granted to our non-
employee directors vest one year after their grant date. The fair value of PARS and PARSUs granted is
amortized over the period(s) in which the related services are rendered.