Intel 2006 Annual Report Download - page 53

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Our goal has been to keep the potential incremental dilution related to our equity incentive plans to a long-
term average of less
than 2% annually. The dilution percentage is calculated using the equity-
based awards granted during the period, net of awards
cancelled due to employees leaving the company and expired stock options, divided by the total outstanding shares at the
beginning of the year. For purposes of this disclosure, equity-based awards include stock option grants and restricted stock
unit grants, but exclude rights granted under the stock purchase plan and awards assumed in connection with acquisitions.
Equity-based awards granted to employees, including officers, and non-employee directors from 2002 through 2006 are
summarized as follows:
In accordance with a policy established by the Compensation Committee of the Board of Directors, total equity-based awards
granted to the listed officers may not exceed 5% of total equity-based awards granted in any year. During 2006, equity-based
awards granted to listed officers amounted to 1.6% of the grants made to all employees. All equity-based awards 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 Global Select Market*.
For additional information regarding equity incentive plans and the activity for the past three years, see “Note 3: 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 “Compensation Discussion and Analysis” and “Proposal 3:
Approval of Amendment and Extension of the 2006 Equity Incentive Plan” in our 2007 Proxy Statement, which is
incorporated by reference into this Form 10-K.
Business Outlook
Our future results of operations and the other forward-looking statements contained in this Form 10-K, including this MD&A,
involve a number of risks and uncertainties—in particular, the statements regarding our goals and strategies, new product
introductions, plans to cultivate new businesses, future economic conditions, revenue, pricing, gross margin and costs, capital
spending, depreciation and amortization, research and development expenses, potential impairment of investments, the tax
rate, and pending tax and legal proceedings. Our future results of operations may also be affected by the amount, type, and
valuation of the share-based awards granted as well as the amount of awards cancelled due to employees leaving the company
and the timing of award exercises by employees. We are in the midst of a structure and efficiency program which may result in
several actions that could have an impact on expense levels and gross margin. In addition to the various important factors
discussed above, a number of other important factors could cause actual results to differ materially from our expectations. See
the risks described in “Risk Factors” in Part I, Item 1A of this Form 10-K.
43
(Shares in Millions)
2006 2005 2004 2003 2002
Total equity
-
based awards granted
82
119
115
110
174
Less: equity
-
based awards cancelled
(67
)
(38
)
(32
)
(40
)
(44
)
Net equity
-
based awards granted
15
81
83
70
130
Dilution %
—
net equity
-
based awards granted as % of outstanding shares
1
0.2
%
1.3
%
1.3
%
1.1
%
1.9
%
Equity-based awards granted to listed officers
2
as % of total equity-based
awards granted
1.6
%
1.4
%
1.1
%
2.4
%
1.7
%
Equity
-
based awards granted to listed officers
2
as % of outstanding shares
1
<0.1
%
<0.1
%
<0.1
%
<0.1
%
<0.1
%
Cumulative equity-based awards held by listed officers
2
as % of total equity-
based awards outstanding
1.9
%
1.9
%
2.1
%
2.1
%
2.1
%
Share-based compensation
3
recognized for listed officers
2
as a % of total
share
-
based compensation recognized
3
1.4
%
—
—
—
—
1
Outstanding shares as of the beginning of each period.
2
For all years presented, excluding 2004,
“listed officers” includes our Chief Executive Officer, our Chief Financial
Officer, and the three other most highly compensated executive officers serving at the end of the years presented. For
2004,
“
listed officers
”
also includes an officer who retired in January 2005.
3
Includes amounts recognized in the financial statements for stock options and restricted stock units according to the
provisions of SFAS No. 123(R), which was adopted in the first quarter of 2006.