These excerpts taken from the C DEF 14A filed Mar 20, 2009.
Our simple overhang and fully diluted overhang are stated in Table II below, as of the February 27, 2009 record date, and as estimated as of April 21, 2009, assuming the new plan proposal is approved. The calculations are based on the figures reported in Table I, and common shares outstanding as of February 27, 2009. For these purposes, it is assumed that the number of shares outstanding and the number of shares subject to outstanding awards on April 21, 2009, will be the same as on the record date. If the 2009 plan is approved, at April 21, 2009, there will be a maximum of 108 million shares available for grant as full-value awards, or a maximum of 250 million shares available for grant as stock options or sars. These figures do not include the 66.45 million shares available for
purchase pursuant to the stockholder-approved, tax-qualified 2000 employee stock purchase plan, which expires on April 30, 2010. However, these figures do include the 123.95 million shares subject to currently outstanding options. As reported in Table I, the weighted average exercise price of these options is $40.52, and their weighted average remaining life is 2.9 years, making it extremely unlikely that any shares will ever be issued on account of these currently outstanding options. Additionally, shares subject to these options will not become available for new awards if the options are canceled or expire unexercised, or if any shares are used to pay their exercise prices or withheld to pay taxes.
Burn rate expresses the amount of equity in the form of stock options or stock awards a company grants annually relative to its number
of common shares outstanding. It is calculated as follows:
Table III shows our burn rates for the 12-month periods ending December 31, 2006, 2007 and 2008, and the three-year average. The calculations are based on annual grant data contained in our annual reports on Form 10-K and the basic weighted average number of common shares outstanding during those periods. The sharp increase in the burn rate from
2007 to 2008 is due to the unanticipated decline in the market price of the common stock in 2008. As mentioned previously, significant changes were made to cap, effective with the January 2009 awards, in order to reduce the scope of participation and the number of shares that would have to be granted at current market prices.