Symantec 2008 Annual Report Download - page 63

to recognize the economic difference in the equity vehicle types. Our annual gross and net burn rates have been
under 3% since fiscal 2005. The Committee targets an annual gross burn rate of approximately 3% to allow for
effective attraction, retention and motivation of senior management and the broader employee base, while staying
within parameters acceptable to stockholders. The Committee determines the percentage of equity to be made
available for our equity programs with reference to the companies in our market composite. In addition, the
Committee considers the accounting costs that will be reflected in our financial statements when establishing the
forms of equity to be granted and the size of the overall pool available. For fiscal 2008, our gross burn rate was
2.52%, our net burn rate was 1.93%, and our overhang was 16.3%.
Stock Options: Options provide an incentive for executives to drive long-term share price appreciation
through the development and execution of effective long-term strategies. Stock option value is only realized if the
trading price of our common stock increases, and option holder interests are therefore aligned with stockholder
interests. Stock options are issued with exercise prices at 100% of the grant-date fair market value to assure that
executives will receive a benefit only when the trading price increases. Option awards generally have value for the
executive only if the executive remains employed for the period required for the shares to vest. Options granted in
fiscal 2008 vest 25% after the first year and on a monthly basis thereafter for the next 36 months, and, if not
exercised, expire in a maximum of seven years (or earlier in the case of termination of employment). Vesting options
over four years provides retention value, and is in line with market practices among companies in our market
composite and other option recipients within the Company. (Details of stock options granted to the named executive
officers in fiscal 2008 are disclosed in the Grants of Plan-Based Awards table included on page 56.)
Restricted Stock Units (RSUs): RSUs represent the right to receive one share of Symantec common stock for
each RSU upon the settlement date, which is the date on which certain conditions, such as continued employment
with us for a pre-determined length of time, are satisfied. Starting in fiscal 2007, we elected to substitute a
significant percentage of the named executive officers’ equity incentive award value, which had historically been
provided with only stock options, with RSUs. This change was made to enhance the retention of named executive
officers and balance the more volatile rewards associated with stock options. The Committee believes that RSUs
align the interests of the named executive officers with the interests of the stockholders because the value of these
awards appreciate if the trading price of our common stock appreciates, and also have retention value even during
periods in which our trading price does not appreciate, which supports continuity in the senior management team.
Shares of our stock are issued to RSU holders as the awards vest. The vesting schedule for RSUs granted to our
named executive officers in fiscal 2008 (other than the promotional grant of 30,000 RSUs to Mr. Salem in February
2008, which include a four-year vesting schedule) provided that 50% of the awards vests after the first year and 50%
after the second year. The vesting schedule for the RSUs was intended to complement the four-year vesting period
that applies to stock options and the three-year performance cycle for the LTIP awards described below. The
combination of these three components provides an ongoing retention and performance incentive for our senior
management. (Details of RSUs granted to the named executive officers in fiscal 2008 are disclosed in the Grants of
Plan-Based Awards table on page 56.)
Equity Grant Practices: The Committee generally approves grants to the named executive officers at its first
meeting of each fiscal year. The grant date for all stock options granted to employees, including the named
executive officers, is the 10th day of the month following the meeting (or the business day closest to such day if such
day is not a business day). The exercise price for stock options is the closing price of our common stock, as reported
on the Nasdaq Global Select Market, on the date of grant. The Committee does not coordinate the timing of equity
awards with the release of material nonpublic information. The Committee may approve grants to named executive
officers at other times during the year, in which case, the grant date is the 10th day of the month following the date
on which the Committee approves the grant and the exercise price of any options so granted is the closing price on
the grant date. RSUs may be granted from time to time throughout the year, but all RSUs generally vest on either
June 1 or December 1 for administrative reasons. In connection with his promotion to our Chief Operating Officer in
January 2008, the Committee at a regular meeting granted Mr. Salem in February 2008 30,000 RSUs which vest in
four equal annual installments concluding in March 2012 and 100,000 stock options with a standard four-year
vesting schedule.
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