|
Compuware Annual Report 2001 |
|
Compuware Corporation and Subsidiaries Consolidated Financial Statements Notes to Consolidated Financial Statements
YEARS ENDED MARCH 31. 2001, 2000 AND 1999
12. BENEFIT PLANS
Employee Stock Ownership Plan - In July 1986, the Company established an Employee Stock
Ownership Plan (ESOP) and Trust. Under the terms of the ESOP, the Company makes annual
contributions to the Plan for the benefit of substantially all employees of the Company.
The contribution may be in the form of cash or common shares of the Company. The Board of
Directors may authorize contributions between a maximum of 25% of eligible compensation and a
minimum sufficient to cover current obligations of the Plan. The Company made contributions of
$10,685,000, $6,497,000 and $4,558,000 in fiscal 2001, 2000 and 1999, respectively. This is a
non-leveraged ESOP plan.
Employee Stock Purchase Plan — During fiscal 1996, the Company adopted and the
shareholders approved the global Employee Stock Purchase Plan (GESPP) under which the Company
was authorized to issue up to eight million shares of common stock to
eligible employees. The Company's initial offering periods were (i) October 1, 1995 through
June 30, 1996 and (ii) July 1, 1996 through December 31, 1996. Thereafter, offering periods
have commenced on January 1st and July 1st each year. The final offering period commenced on
January 1, 2001 and ended in March 2001 at which time all shares authorized under the plan
were sold. Under the terms of the plan, employees could elect to have up to 10% of their
annual earnings withheld to purchase Company stock, with a value not to exceed $25,000. The
purchase price was 85% of the first or last day's closing market price for each offering
period, whichever was lower. During fiscal 2001, 2000 and 1999, the Company sold approximately
4,515,000, 1,009,000 and 1,177,000 shares, respectively, to eligible employees under the plan.
Employee Slock Option Plans — The Company adopted five Employee Stock Option Plans
dating back to 1992. These plans provide for grants of options to purchase up to 91,000,000
shares of the Company's common stock to employees of the Company, of which approximately
43,157,000 were outstanding at March 31, 2001. Under the terms of the plans, the Company may
grant nonqualified options at the fair market value of the stock on the date of grant. During
fiscal 2001, the Company granted approximately 9,855,000 options under the five different
Employee Stock Option Plans.
In March 2001, the Company adopted the 2001 Broad Based Stock Option Plan. The plan provides
for grants of options to purchase up to 50,000,000 shares of the Company's common stock to
employees or directors of the Company, of which approximately 1,461,000 were outstanding at
March 31, 2001. Under the terms of the plan, the Company may grant nonqualified stock options
at the fair market value of the stock on the date of grant. In April 2001, the Company granted
approximately 22,000,000 shares under the Broad Based Stock Option Plan.
Non-Employee Director Stock Option Plan - In
July 1992, the Company adopted the Stock Option Plan for Non-Employee Directors. Under this
plan, 2,400,000 shares of common stock are reserved for
issuance to non-employee directors of the Company who have not been employees of the Company,
any subsidiary of the Company or any entity which controls more than 10% of the total combined
voting power of the Company's capital stock for at least one year prior to becoming director.
During fiscal 2001, approximately 166,000 options were granted under the Non-Employee Director
Stock Option Plan. Approximately 1,512,000 options were outstanding at March 31, 2001.
Each non-employee director receives an annual grant of 20,000 options with additional grants
for board and committee meeting attendance. In addition, each non-employee director may
receive an additional grant of 10,000 or 20,000 options if pre-established earnings targets
are achieved by the Company. Non-employee directors are granted stock options out of the
Non-Employee Director Stock Option Plan or the 1999 Employee Stock Option Plan.
Options generally vest in cumulative annual or semi-annual installments over a three to five
year period. All options were granted at fair market value and expire 10 years from the date
of grant.
At March 31, 2001, approximately 142,000 options were outstanding under plans that were
terminated by the Company, of which approximately 128,000 are fully vested. All outstanding
options under the terminated plans remain in effect in accordance with the terms under which
they were granted.
During fiscal 1999, the Company implemented a Replacement Stock Option Award program. The
program allows selected participants to pay the option exercise price with shares of currently
owned Company stock. The Company grants a new stock option award to replace the shares
exchanged in the transaction. During fiscal 2001, approximately 2,902,000 shares were
exercised under the Replacement Stock Option Award program for which approximately 1,973,000
replacement options were granted.
The Company applies APB Opinion No. 25 and related
Interpretations in accounting for its plans. Stock options are granted at current market
prices at the date of grant, therefore, no compensation cost has been recognized.
If compensation cost for the Company's stock-based compensation plans had been determined
based on the fair value at the grant dates for fiscal 2001, 2000 and 1999 consistent with the
method prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation," Compuware's net
income and earnings per share would have been adjusted to the pro forma amounts indicated
below:
The pro forma amounts for compensation cost may not be indicative of the effects on net income and earnings per share for future years. Under SFAS No. 123, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for grants in fiscal 2001, 2000 and 1999, respectively: expected volatility of 95.55%, 85.85% and 66.88%; risk-free interest rates of 4.6%, 6.4% and 5.3% and expected lives at date of grant of 5.0, 4.8 and 4.9 years. Dividend yields were not a factor as the Company has never issued cash dividends and has no plans to do so in the future. Under SFAS No. 123, the fair value of the employees' stock purchase rights acquired by participation in the GESPP were estimated using the Black-Scholes model with assumptions comparable to the stock option plans above. The weighted-average fair value of the purchase rights granted in fiscal 2001, 2000 and 1999 were $3.12, $12.00 and $6.48, respectively. A summary of the status of fixed stock option grants under Compuware's stock-based compensation plans as of March 31, 2001, 2000 and 1999, and changes during the years ending on those dates is as follows (shares in thousands):
The following table summarizes information about fixed stock options outstanding at March 31, 2001 (shares in thousands):
The maximum number of shares for which additional options may be granted was 55,672,142 at March 31, 2001, 9,437,993 at March 31, 2000 and 13,306,421 at March 31, 1999. At March 31, 2001, a total of 101,944,135 shares of the Company's common stock are reserved for issuance under all option plans. Income tax benefits associated with the exercise of stock options are reflected as adjustments to additional paid-in capital. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
