This excerpt taken from the VRSN DEF 14A filed Apr 10, 2006.
APPROVAL OF THE 2006 EQUITY INCENTIVE PLAN
We are asking stockholders to approve the VeriSign 2006 Equity Incentive Plan (the 2006 Plan), which was approved by the Board of Directors on February 13, 2006. If approved by stockholders, the 2006 Plan will replace our 1998 Directors Stock Option Plan, 1998 Equity Incentive Plan, and 2001 Stock Incentive Plan (collectively Prior Plans) before their expiration and will become VeriSigns only plan for providing stock-based incentive compensation to both our eligible employees and non-employee directors. Our 1998 Employee Stock Purchase Plan will remain in effect. If stockholders do not approve the 2006 Plan, the Prior Plans will remain in effect. We firmly believe that a broad-based equity program is a necessary and powerful employee incentive and retention tool that benefits all of VeriSigns stockholders. The following summary of certain major features of the 2006 Plan is qualified in its entirety by reference to the full text of the 2006 Plan, which is attached to this Proxy Statement as Appendix A.
Approval of the 2006 Plan is intended to enable VeriSign to achieve the following objectives:
1. The continued ability of VeriSign to offer stock-based incentive compensation to substantially all of our eligible employees and non-employee directors, while maintaining a low annual rate of dilution relative to our peers. We are requesting approval of 27,000,000 shares for the 2006 Plan.
2. The ability to utilize various equity awards, including stock options, restricted stock awards, restricted stock units, stock appreciation rights and stock bonus awards, as deemed appropriate by the compensation committee and management. The various awards available under the 2006 Plan will give VeriSign greater flexibility to respond to market-competitive changes in equity compensation practices. Stock options priced at the full fair market value of VeriSign common stock on the date of grant are currently our main form of equity compensation to our broad-based employee population and non-employee directors.
3. The reduction of VeriSigns total stock overhang. Overhang is the total number of shares related to options and other equity awards granted but not yet exercised, plus shares available for grant, divided by the total number of shares outstanding. The 2006 Plan gives VeriSign the flexibility to grant restricted stock, restricted stock units and bonus stock, which would result in less overall total stock overhang because fewer shares would be granted upon settlement of the award (when compared to a stock option or a stock appreciation right).