Intel 2004 Annual Report Download - page 40

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Employee Equity Incentive Plans
Our stock option program is a broad-based, long-
term retention program that is intended to attract and retain talented employees and align
stockholder and employee interests. In May 2004, stockholder approval was obtained for the 2004 Equity Incentive Plan (the 2004 Plan).
Under the 2004 Plan, 240 million shares of common stock were made available for issuance during the two-year period ending June 30, 2006.
Under the 2004 Plan, options to purchase shares may be granted to all employees and non-employee directors. We may also use other types of
equity incentive awards, such as restricted stock, stock units and stock appreciation rights. The 2004 Plan also allows for performance-based
vesting for equity incentive awards. We presently expect to request stockholder approval at our May 2005 Annual Stockholders’ Meeting to
extend the term of the 2004 Plan by one year, to June 30, 2007, and make additional common shares available for issuance as equity awards to
employees and non-employee directors during this period.
We have a goal to keep the potential incremental dilution related to our option program to a long-term average of less than 2% annually.
The dilution percentage is calculated using the new option grants for the year, net of options cancelled due to employees leaving the company
and options expired, divided by the total outstanding shares at the beginning of the year.
Options granted to employees, including officers, and non-employee directors from 2000 through 2004 are summarized as follows:
(Shares in Millions)
2004
2003
2002
2001
2000
Total options granted
1
115
110
174
238
163
Less options cancelled
1
(32
)
(40
)
(44
)
(47
)
(31
)
Net options granted
83
70
130
191
132
Net grants as % of outstanding shares
2
1.3
%
1.1
%
1.9
%
2.8
%
2.0
%
Grants to listed officers
3
as % of total options granted
1.1
%
2.4
%
1.7
%
0.8
%
0.4
%
Grants to listed officers
3
as % of outstanding shares
2
<0.1
%
<0.1
%
<0.1
%
<0.1
%
<0.1
%
Cumulative options held by listed officers
3
as % of total options outstanding
2.1
%
2.1
%
2.1
%
2.0
%
2.4
%
1
Excluding options assumed in connection with acquisitions.
2
Outstanding shares as of the beginning of each period.
In accordance with a policy established by the Compensation Committee of the Board of Directors, total options granted to listed officers
may not exceed 5% of total options granted in any year. During 2004, options granted to listed officers amounted to 1.1% of the grants made to
all employees. All stock option grants to executive officers are made after a review by, and with the approval of, the Compensation Committee.
All members of the Compensation Committee are independent directors, as defined in the applicable rules for issuers traded on The NASDAQ
Stock Market*.
For additional information regarding the equity incentive plans and the activity for the past three years, see “Note 11: 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 “Report of the Compensation Committee on Executive Compensation” in our 2005 Proxy Statement,
which is incorporated by reference.
37
3
For 2004,
“listed officers” included our Chief Executive Officer and each of the five other most highly compensated executive officers
serving at the end of 2004. One of these listed officers retired in January 2005. For 2000 through 2003, “listed officers” included our
Chief Executive Officer and each of the four other most highly compensated executive officers serving at the end of the years
presented.