Symantec 2007 Annual Report Download - page 107

by two shares; and 3) a change in the form of equity grants to our non-employee directors from stock options to a
fixed dollar amount of RSUs.
Assumed Veritas stock options
In connection with our acquisition of Veritas, we assumed each outstanding option to purchase Veritas
common stock with an exercise price equal to or less than $49.00 as well as each additional option required to be
assumed by applicable law. Each option assumed was converted into an option to purchase Symantec common stock
after applying the exchange ratio of 1.1242 shares of Symantec common stock for each share of Veritas common
stock. In total, we assumed and converted Veritas options into options to purchase 66 million shares of Symantec
common stock. In addition, we assumed and converted all outstanding Veritas RSUs into approximately 425,000
Symantec RSUs based on the exchange ratio.
The assumed options and RSUs retained all applicable terms and vesting periods. In general, the assumed
options vest over a four-year period from the original date of grant. Options granted prior to May 2004 generally
have a maximum term of 10 years and options granted thereafter generally have a maximum term of seven years.
The assumed RSUs generally vest over a three or four year period from the original date of grant.
Other stock option plans
Options remain outstanding under several other stock option plans, including the 2001 Non-Qualified Equity
Incentive Plan, the 1999 Acquisition Plan, the 1996 Plan, and various plans assumed in connection with
acquisitions. No further options may be granted under any of these plans.
Acceleration of stock option vesting
On March 30, 2006, we accelerated the vesting of certain stock options with exercise prices equal to or greater
than $27.00 per share that were outstanding on that date. We did not accelerate the vesting of any stock options held
by our executive officers or directors. The vesting of options to purchase approximately 7 million shares of common
stock, or approximately 14% of our outstanding unvested options, was accelerated. The weighted-average exercise
price of the stock options for which vesting was accelerated was $28.73. We accelerated the vesting of the options to
reduce future stock-based compensation expense that we would otherwise be required to recognize in our results of
operations after adoption of SFAS No. 123R. Because of system constraints, it is not practicable for us to estimate
the amount by which the acceleration of vesting will reduce our future stock-based compensation expense. The
acceleration of the vesting of these options did not result in a charge to expense in fiscal 2006.
Valuation of stock-based awards
The fair value of each stock option granted under our equity incentive plans and each ESPP purchase right
granted prior to July 1, 2005 is estimated on the date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions:
2007 2006 2005 2006 2005
Employee
Stock Options
Employee
Stock
Purchase Plan
Expected life (years) ............................... 3 3 5 0.5 1.25
Expected volatility ................................. 0.34 0.45 0.64 0.33 0.36
Risk free interest rate ............................... 4.86% 3.55% 3.71% 4.26% 2.33%
The expected life of options is based on an analysis of our historical experience of employee exercise and post-
vesting termination behavior considered in relation to the contractual life of the option. Expected volatility is based
on the average of the historical volatility for the period commensurate with the expected life of the option and the
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)