Intel 2005 Annual Report Download - page 45

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Employee Equity Incentive Plans
Our equity incentive programs are broad-based, long-term retention programs that are intended to attract and retain talented employees and align
stockholder and employee interests. Under the 2004 Equity Incentive Plan (the 2004 Plan), 240 million shares of common stock were made available
for issuance during the two-year period ending June 30, 2006. In May 2005, we obtained stockholder approval to extend the term of the 2004 Plan by
one year, to June 30, 2007, and to make an additional 130 million shares of common stock available for issuance as equity awards to employees and
non-employee directors.
Our goal has been to keep the potential incremental dilution related to our equity incentive programs to a long-term average of less than 2% annually.
The dilution percentage is calculated using the new option grants for the year, net of options cancelled due to employees leaving the company and
expired options, divided by the total outstanding shares at the beginning of the year.
Options granted to employees, including officers, and non-employee directors from 2001 through 2005 are summarized as follows:
In accordance with a policy established by the Compensation Committee of the Board of Directors, total options granted to the listed officers may not
exceed 5% of total options granted in any year. During 2005, options granted to listed officers amounted to 1.4% of the grants made to all employees.
All stock option grants to executive officers are determined by the Compensation Committee. All members of the Compensation Committee are
independent directors, as defined in the applicable rules for issuers traded on The NASDAQ Stock Market*.
For additional information regarding equity incentive plans and the activity for the past three years, see “Note 11: Employee Equity Incentive Plans”
in
Part II, Item 8 of this Form 10-K.
Information regarding our equity incentive plans should be read in conjunction with the information appearing under
the heading “Report of the Compensation Committee on Executive Compensation” in our 2006 Proxy Statement, which is incorporated herein by
reference.
In-the -money and out-of -the-money
1
option information as of December 31, 2005 was as follows:
41
(Shares in Millions)
2005
2004
2003
2002
2001
Total options granted
1
119
115
110
174
238
Less options cancelled
1
(38
)
(32
)
(40
)
(44
)
(47
)
Net options granted
81
83
70
130
191
Net grants as % of outstanding shares
2
1.3
%
1.3
%
1.1
%
1.9
%
2.8
%
Grants to listed officers
3
as % of total options granted
1.4
%
1.1
%
2.4
%
1.7
%
0.8
%
Grants to listed officers
3
as % of outstanding shares
2
<0.1
%
<0.1
%
<0.1
%
<0.1
%
<0.1
%
Cumulative options held by listed officers
3
as % of total options outstanding
1.9
%
2.1
%
2.1
%
2.1
%
2.0
%
1
Excluding options assumed in connection with acquisitions.
2
Outstanding shares as of the beginning of each period.
3
For 2005,
“
listed officers
”
are our Chief Executive Officer and the four other most highly compensated executive officers serving at the end of
2005. For 2004, “listed officers” are those officers plus an officer who retired in January 2005. For 2001 through 2003, “listed officers” are
our Chief Executive Officer and each of the four other most highly compensated executive officers serving at the end of the years presented.
Exercisable
Unexercisable
Total
Weighted
Weighted
Weighted
Average
Average
Average
(Shares in Millions)
Shares
Exercise Price
Shares
Exercise Price
Shares
Exercise Price
In
-
the
-
money
241.3
$
18.06
318.4
$
22.34
559.7
$
20.49
Out
-
of
-
the
-
money
227.9
$
40.92
112.3
$
28.88
340.2
$
36.95
Total options outstanding
469.2
$
29.16
430.7
$
24.04
899.9
$
26.71
1
Out
-
of
-
the
-
money options have an exercise price equal to or above $24.96, the closing price of Intel stock on December 30, 2005, as reported
on The NASDAQ Stock Market*.