Intel 2004 Annual Report Download - page 71

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11: Employee Equity Incentive Plans
Stock Option Plans
In May 2004, stockholder approval was obtained for the 2004 Equity Incentive Plan (the 2004 Plan). Under the 2004 Plan, 240 million
shares of common stock were made available for issuance during the two-year period ending June 30, 2006. Under the 2004 Plan, options to
purchase shares may be granted to all employees and non-
employee directors. Intel may also use other types of equity incentive awards, such as
restricted stock, stock units and stock appreciation rights. The 2004 Plan also allows for performance-based vesting for equity incentive
awards. The Intel Corporation 1984 Stock Option Plan expired in May 2004, and the Intel Corporation 1997 Stock Option Plan was terminated
upon stockholder approval of the 2004 Plan. As of December 25, 2004, substantially all of the company’s employees were participating in one
of the stock option plans. Options granted by the company under the 2004 Plan will generally expire seven years from the grant date. Options
granted under the company’s previous stock option plans generally expire ten years from the grant date. Options granted in 2004 to existing
and newly hired employees generally vest over a four-
year period from the date of grant. Certain grants to key employees have delayed vesting,
generally beginning six years from the date of grant. In prior years, Intel also assumed the stock option plans and the outstanding options of
certain acquired companies. No additional stock grants will be made under these assumed plans. Additional information with respect to stock
option plan activity is as follows:
In December 2003, the Board of Directors approved a reduction in the number of shares authorized for issuance under the 1997 Stock
Option Plan, reducing the number of shares available for issuance by 325 million. In November 2002, a supplemental stock option grant was
given to employees who had previously been granted options in 2001 and 2000 that had exercise prices above the November 2002 market
price. This 2002 supplemental grant was made in order to retain employees, due to competitive market conditions and a decline in the
company’s stock price. These 2002 supplemental stock option grants vest in equal amounts over four years.
The range of option exercise prices for options outstanding at December 25, 2004 was $0.05 to $87.90. This range reflects the impact of
options assumed with acquired companies in addition to the fluctuating price of Intel common stock.
64
Outstanding Options
(Shares in Millions)
Shares
Available
for Grant
Number of
Shares
Weighted
Average
Exercise Price
December 29, 2001
1,054.6
768.5
$
25.33
Supplemental grant
(118.1
)
118.1
$
20.23
Other grants
(55.5
)
55.5
$
25.43
Exercises
—
(
51.4
)
$
6.79
Cancellations
40.8
(45.3
)
$
33.56
December 28, 2002
921.8
845.4
$
25.31
Grants
(109.9
)
109.9
$
20.22
Exercises
—
(
63.7
)
$
10.08
Cancellations
40.0
(41.5
)
$
30.49
Reduction in shares available for grant
(325.0
)
—
—
December 27, 2003
526.9
850.1
$
25.54
Grants
(114.7
)
114.7
$
26.23
Exercises
—
(
48.4
)
$
10.89
Cancellations
11.5
(32.5
)
$
30.00
Expiration of 1984 Stock Option Plan
(143.2
)
—
—
Cancellation of 1997 Stock Option Plan
(300.1
)
—
—
Adoption of 2004 Equity Incentive Plan
240.0
—
—
December 25, 2004
220.4
883.9
$
26.26
Options exercisable at:
December 28, 2002
274.0
$
16.57
December 27, 2003
327.5
$
20.53
December 25, 2004
397.5
$
23.83