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This excerpt taken from the SYMC DEF 14A filed Jul 25, 2006. Equity
Compensation
We believe that equity compensation is an important tool for the
retention of our executive officers and the alignment of their
interests with those of the company’s stockholders. Stock
options, restricted stock units and other forms of equity
compensation have typically been granted to our executive
officers when the executive first joins Symantec, in connection
with a significant change in responsibilities, as part of an
annual grant, at other times based upon performance, and
occasionally to achieve equitable compensation within a peer
group. Stock options have value for the executive only if the
price of Symantec’s stock increases above the fair market
value on the grant date. In addition, equity awards generally
have value for the executive only if the executive remains in
our employ for the period required for the shares to vest.
When making annual grants of stock options or other equity
awards for executive officers, we consider Symantec’s
corporate performance during the past year and recent quarters,
the responsibility level and performance of the executive
officer, prior option grants or equity awards to the executive
officer and the level of vested and unvested equity awards. The
stock options vest over a four-year period, and have exercise
prices equal to the fair market value of our common stock on the
date of grant under the terms of the stock plan, while
restricted stock units granted to executive officers in fiscal
year 2006 have variable vesting schedules, including two year
cliff vesting and annual vesting over three or four years.
The number of option shares or other equity compensation awards
granted by the Committee is within the discretion of the
Committee and is based on anticipated future contribution and
ability to impact corporate
and/or
business unit results, past performance or consistency within
the executive’s peer group.
Over the past three years, Symantec has taken specific actions
that reflect corporate responsibility and our desire to decrease
the total dilution experienced by stockholders as a result of
our equity plans. As part of this effort, in July 2004, the
Board eliminated the “evergreen” provision in
Symantec’s 1998 Employee Stock Purchase Plan, whereby the
number of shares available for issuance increased automatically
on January 1 of each year by 1% of our outstanding shares of
common stock. At the same time, we remain focused on attracting
and retaining key personnel to help us solidify our position as
the world leader in information integrity through our security
and storage management solutions. As a measure of our success in
lowering overall dilution and effectively using our option pool,
we have lowered the yearly burn rate in the last four
consecutive fiscal years, reducing the annual rate down
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from 8% to 2% over this period. Burn rate in this context is
defined as total shares granted as a percentage of total common
stock outstanding at the end of the period reviewed. During this
time, our total dilution overhang has decreased from 28% to 14%.
Overhang in this context is defined as all options and awards
outstanding and available for issuance under all of our equity
incentive plans as a percentage of total common stock
outstanding at the end of the period reviewed.
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