Symantec 2008 Annual Report Download - page 38

participant upon settlement, which generally occurs at the time the restricted stock units vest. The 2004 Plan allows
the Company to withhold shares from the restricted stock unit award to satisfy the Participant’s withholding tax
obligation, with Symantec retiring those shares and being required to tender cash from its general funds to the
applicable tax authorities in an amount equal to the value of the shares withheld.
Restricted Stock. A participant receiving restricted shares for services recognizes taxable income when the
shares become vested. Upon vesting, the participant will include in ordinary income an amount, which will be
subject to income tax withholding by Symantec if the participant is an employee, equal to the difference between the
fair market value of the shares at the time they become substantially vested and any amount paid for the shares.
Upon resale of the shares by the participant, subsequent appreciation or depreciation in the value of the shares is
treated as long-term or short-term capital gain or loss depending on the amount of time the shares were held by the
participant.
Stock Appreciation Rights. A grant of a stock appreciation right has no federal income tax consequences at
the time of grant. Upon the exercise of stock appreciation rights, the value of the shares or other consideration
received is generally taxable to the recipient as ordinary income, which will be subject to income tax withholding by
Symantec if the recipient is an employee.
Section 409A. The American Jobs Creation Act of 2004 added Section 409A to the tax code, generally
effective January 1, 2005. The IRS has issued proposed and final regulations that, in part, give employers until the
end of 2008 to effect written Section 409A implementation in almost all circumstances. Section 409A covers most
programs that defer the receipt of compensation to a succeeding year. It provides rules for elections to defer (if any)
and for timing of payouts. There are significant penalties placed on the individual employee if compensation does
not conform to the strict requirements of Section 409A. While Section 409A may affect the timing of our
withholding obligations, it does not affect our ability to deduct deferred compensation. Section 409A generally
would not apply to stock options granted under the 2004 Plan. It may apply to restricted stock units granted under
the 2004 Plan. The 2004 Plan allows for us to defer the issuance of shares with respect to 2004 Plan awards.
Tax Treatment of Symantec
Subject to any withholding requirement, the standard of reasonableness, and (if applicable) Section 162(m) of
the Code, Symantec generally will be entitled to a deduction to the extent any participant recognizes ordinary
income from an award granted under the 2004 Plan.
ERISA Information
The 2004 Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974,
as amended.
Accounting Treatment
Symantec will recognize compensation expense in connection with awards granted under the 2004 Plan as
required under applicable accounting standards, including under Statement of Financial Accounting Standards
No. 123(R). Symantec currently recognizes compensation expense associated with equity awards over an award’s
requisite service period and establishes fair value of equity awards in accordance with applicable accounting
standards.
New Plan Benefits
Except as described in “Summary Description of 2004 Equity Incentive Plan (as amended and restated) —
Non-Employee Director Equity Awards” above, future awards to directors, executive officers, employees and other
eligible participants under the 2004 Plan are discretionary and cannot be determined at this time. Further, since the
number of shares subject to the restricted stock units to be automatically granted to non-employee directors under
the 2004 Plan depends on the fair market value of our common stock at future dates, it is not possible to determine
the exact number of shares that will be subject to such future restricted stock unit awards.
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