THQ 2008 Annual Report Download - page 87

not expect these examinations to be concluded and settled in the next 12 months, therefore, we are
currently unable to estimate the potential impact to the liability for unrecognized tax benefits or the timing
of such changes. We do not anticipate any significant impact to its unrecognized tax benefit balance in
fiscal 2009 related to the expiration of the statutes of limitations.
Our policy is to recognize interest and penalty expense, if any, related to uncertain tax positions as a
component of income tax expense. For the fiscal years ended March 31, 2008 and 2007, we recognized
$0.1 million of interest income and $0.4 million in interest expense, respectively, related to uncertain tax
positions. As of March 31, 2008 and April 1, 2007, we had an accrued liability of $0.6 million and
$0.7 million, respectively, for interest related to uncertain tax positions. These amounts are included in
other long-term liabilities in the consolidated balance sheets.
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. The plan allows employees the ability to defer up to 60% of their annual
compensation (up to the 2008 IRS annual maximum of $15,500). The plan also provides that we will match
the employees’ contribution equal to the employee’s deferral, up to 4% of eligible compensation with a
maximum of $9,200 based on the 2008 IRS maximum compensation limit. We may also contribute funds to
the plan in the form of a discretionary profit-sharing contribution. Employer contributions under the plan
were $6.1 million, $4.9 million and $3.5 million in the fiscal years ended March 31, 2008, 2007 and 2006,
respectively.
14. Stock-based Compensation
Prior to July 20, 2006, we utilized 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 provided for the issuance of up to 14,357,500 shares
available for employees, consultants and non-employee directors, and the NEEP plan provided for the
issuance of up to 2,142,000 shares available for nonexecutive employees of THQ of which no more than
20% was available for awards to our nonexecutive officers and no more than 15% was available for awards
to the nonexecutive officers or general managers of our subsidiaries or divisions. The 1997 Plan and the
NEEP Plan were cancelled on July 20, 2006, the same day THQ’s stockholders approved the THQ Inc.
2006 Long-Term Incentive Plan (‘‘LTIP’’).
Under the 1997 Plan, we granted incentive stock options, non-qualified stock options, performance
accelerated restricted stock (‘‘PARS’’) and performance accelerated restricted stock units (‘‘PARSUs’’).
The NEEP Plan provided for the grant of only non-qualified stock options to non-executive officers of the
Company. The LTIP provides for the grant of stock options (including incentive stock options), stock
appreciation rights (SARs), restricted stock awards, restricted stock units (‘‘RSUs’’), and other
performance awards (in the form of performance shares or performance units) to eligible directors and
employees of, and consultants or advisors to, the Company. Subject to certain adjustments, the total
number of shares of THQ common stock that may be issued under the LTIP shall not exceed 6,000,000
shares. Shares subject to awards of stock options or SARs will count as one share for every one share
granted against the share limit, and all other awards will count as 1.6 shares for every one granted against
the share limit. As of March 31, 2008, we had 3,102,634 shares under the LTIP available for grant.
The purchase price per share of common stock purchasable upon exercise of each option granted under
the 1997 Plan, the NEEP Plan and the LTIP 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 our plans become
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