Linear Technology (LLTC)

However, in January 2009 the Company granted to its key employees options for 6,500,000 shares of common stock at an exercise price of $22.74. Approximately 10% of the total shares granted, or 685,000 shares, were distributed among the Named Executive Officers. The Company made such significant grants because at the time, none of the Company’s then-outstanding stock options had exercise prices below the then-current market value of its common stock and, in most cases, had exercise prices at least twice the then-current fair market value. The Company therefore believed that these previously granted options had limited incentive value to the Company’s employee option holders. These new grants were intended to return to a situation where equity awards closely align a portion of key employees’ compensation with the goals of long-term stockholders. Messrs. Maier and Coghlan each received stock option grants for share amounts that were twice the number of shares as their last stock option grants from 2005 and Messrs. Dobkin and Paulus each received grants of approximately three times the number of shares as their last stock option grants.

     Stock option grants generally vest over a five-year period to encourage option holders to continue in the employment of the Company. The size of stock option grants depends on position, experience, performance and the number of outstanding options already held by the individual. For executive officers, stock options used to be granted on a five quarter rotation. Therefore, an executive officer with longevity with the Company may have had options vesting at four times during a given year. Whereas profit sharing and bonuses reward execution for annual performance with respect to corporate goals, stock options are designed to reward longer term objectives, such as the overall effectiveness of basic corporate strategy. The stock option grants, if any, are generally approved at the time of the Company’s quarterly Board of Director meetings which generally occur on Tuesday. The pricing of the Company’s stock options is generally based on the closing price of the Company’s stock on the Thursday following the meeting. The pricing of the options is based on the Company’s fair market value of its common stock on the date of grant (which is equal to the closing price of the common stock on the date of grant, as determined by Nasdaq).