Polycom (PLCM)

How many restricted stock units will an individual receive if he or she participates in the Exchange Program?

The Exchange Program is structured as a value-for-value exchange. The exchange ratios of shares associated with surrendered eligible options to issued restricted stock units will be established shortly before the start of the Exchange Program. These exchange ratios will be based on the fair value of the eligible options (calculated using a Black-Scholes model). The calculation of fair value using the Black-Scholes model takes into account many variables, such as the volatility of our stock and the expected term of an award. As a result, the

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exchange ratios do not necessarily increase as the exercise price of the award increases. Setting the exchange ratios in this manner is intended to result in the issuance of restricted stock units that have a fair value approximately equal to or less than the fair value of the surrendered eligible options they replace. This value neutral exchange does not result in any additional compensation cost that we must recognize on the restricted stock units, other than compensation expense that might result from rounding or fluctuations in our stock price after the exchange ratios have been set but before the exchange actually occurs. Such charges are not expected to be material. Although the exchange ratios cannot be determined now, we can provide an example if we make certain assumptions regarding the start date of the offer, the fair value of the eligible options, and the fair market value of our common stock. For example, if, at the time we set the exchange ratios (at an assumed date of June 1, 2009 for purposes of this illustration), the fair market value of our common stock is $15 per share, and further assuming that all currently eligible options, above an assumed 52-week high stock price of $28.94 per share, remain outstanding and the award holders remain eligible to participate, the following table summarizes the eligible options, exchange ratios and the restricted stock units that would be granted in the exchange:

The total number of restricted stock units a participating employee will receive with respect to a surrendered eligible option will be determined by converting the number of shares underlying the surrendered award according to the applicable exchange ratio and rounding down to the nearest whole share. The exchange ratios will be applied on a grant-by-grant basis. Note also that if our stock price is higher than our assumed price of $15 per share at the time that the exchange ratios are actually set, the options will be more highly valued and, as a result, the exchange ratios will decrease and we will issue more restricted stock units in the Exchange Program. Conversely, if our stock price were to decrease from our assumed price of $15 per share at the time that the exchange ratios are actually set, the options will be valued at a lesser amount and, as a result, the exchange ratios will increase and we will issue fewer restricted stock units in the Exchange Program.

For purposes of an example only, if a participant exchanged an eligible option of 1,000 shares subject to an option with an exercise price of $34.84 per share and the exchange ratio was one (1) restricted stock unit for every 5.5 shares, he or she would receive 181 restricted stock units in exchange for the surrendered eligible option (1,000 divided by 5.5, rounded down to the nearest whole share).

After the exchange as presented in the example set forth in the table above (assuming all eligible options are tendered and without including any grants after March 31, 2009), there will be 6,664,513 shares available for grant (which does not include 50,417 shares outstanding under the PictureTel Plan ineligible to be returned as available shares for grant under the 2004 Plan), 6,160,550 options outstanding, and 2,517,285 full value awards outstanding. The outstanding options would have a weighted average exercise price of $20.89 and a weighted average remaining term of 2.7 years. In this example, the number of shares available for grant only includes the shares coming back

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into the available share reserve under the 2004 Plan by virtue of the Exchange Program and, therefore, does not include the additional 3,600,000 shares that are also being requested as part of this proxy proposal.