Symantec 2008 Annual Report Download - page 32

PROPOSAL NO. 2
AMENDMENT AND RESTATEMENT OF 2004 EQUITY INCENTIVE PLAN
You are being asked to approve the amendment and restatement of our 2004 Equity Incentive Plan
(the “2004 Plan”), including the reservation of an additional 50,000,000 shares of our common stock for issuance
thereunder (representing approximately 6.0% of our outstanding common stock as of July 4, 2008). The 2004 Plan
was originally approved at Symantec’s 2004 Annual Meeting of Stockholders. The Board approved this amendment
and restatement of the 2004 Plan on April 29, 2008, subject to stockholder approval at the annual meeting.
We seek to increase the number of shares reserved for issuance under the 2004 Plan by 50,000,000 shares. Our
stockholders previously approved the reservation of an aggregate of 58,000,000 shares for issuance under the 2004
Plan, plus an additional number of shares that might transfer to the 2004 Plan upon cancellation of awards granted
under our 1996 Equity Incentive Plan (the “Prior Plan”). We no longer grant awards under the Prior Plan. As of
July 4, 2008, approximately 20,400,000 shares have already been transferred to the 2004 Plan upon cancellation or
forfeiture of Prior Plan awards. While approximately 35,000,000 shares remain subject to options still outstanding
under the Prior Plan, we estimate that less than half of these shares will ever become available for grant under the
2004 Plan because approximately 19,000,000 of these options were vested and “in the money” as of July 4, 2008.
Our usage of shares under the 2004 Plan as of July 4, 2008 is as follows:
• 4,895,366 shares are issued and outstanding as a result of option exercises and settlement of RSUs (and are
therefore not available for future grant);
• 38,896,594 shares are subject to outstanding options and RSUs;
• 23,016,199 shares are available for future issuance (excluding shares that might in the future transfer from
the Prior Plan as noted above); and
• 11,566,459 shares have become unavailable for issuance since we deduct from the shares reserved under the
2004 Plan two shares for every one RSU share we grant.
The use of equity compensation has historically been a significant part of our overall compensation philosophy
at Symantec and is a practice that we plan to continue. The 2004 Plan serves as an important part of this practice and
is a critical part of the compensation package that we offer our personnel. We believe that the use of stock options,
restricted stock units and other equity-based incentives are critical for us to attract and retain the most qualified
personnel and to respond to relevant market changes in equity compensation practices. In addition, awards under the
2004 Plan provide our employees an opportunity to acquire or increase their ownership stake in us, and we believe
this alignment with our stockholders’ interests creates a strong incentive to work hard for our growth and success.
Proposed Increase in Reserved Shares
As of July 4, 2008, options to purchase a total of 89,393,731 shares of our common stock were outstanding
under all of our equity compensation plans at a weighted average exercise price of $18.42 and with a weighted
average remaining life of 4.5 years. There were also a total of 10,916,087 shares subject to issuance upon vesting
and settlement of outstanding restricted stock unit awards issued under our equity compensation plans. In addition
to the shares available for issuance under the 2004 Plan and the Prior Plan described above, as of July 4, 2008,
40,119 shares remain available for issuance under our 2000 Director Equity Incentive Plan and 209,599 shares
remain available for issuance under our 2002 Executive Officer’s Stock Purchase Plan. The 2004 Plan is the only
plan under which we currently have authority to grant options or stock awards.
One of the important factors that we consider in administering our equity compensation programs is our “burn
rate,” meaning the number of shares that we utilize under the 2004 Plan each year. Our gross and net burn rates have
been under 3% since fiscal 2005. For fiscal year 2008, our gross burn rate was 2.52%, our net burn rate was 1.93%,
and our overhang was 16.3%. Please see “Executive Compensation and Related Information — Compensation
Discussion & Analysis (CD&A)” beginning on page 42 for more discussion of our burn rates and overhang analysis.
The reservation of an additional 50,000,000 shares for issuance under the 2004 Plan is consistent with our
anticipated burn rate over at least the next two years. The closing market price of our common stock on July 25,
2008 was $19.45 per share.
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