Download Annual Report, 2.44 MB - Xyratex

XYRATEX LTDNOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(U.S. dollars and amounts in thousands, except per share data, unless otherwise stated)10. Ordinary Shares and Stock Option plans (Continued)restrictions based on the achievement of specific performance goals. Unvested shares will be subject toour right of repurchase or forfeiture.As described in note 4 the Company granted rights to restricted shares to six employees recruitedto develop intellectual property acquired from Cap Epsilon in April 2005. The Company granted rightsto 190 shares at no cost and which will vest based on the achievement of certain revenue targets overthe three years ended August 31, 2008. In addition the Company granted rights to 5 restricted shares toemployees of the acquired Oliver Design business. No expense has been recorded in connection withthese awards because the Company does not consider it probable that the related performance criteriawill be met.At November 30, 2005, 195 awards of restricted shares were outstanding.Share Option PlansThe Company has five plans under which employees have been granted options to purchaseXyratex Group Limited ordinary shares or Xyratex Limited common shares. As part of the scheme ofarrangement all options to purchase Xyratex Group Limited shares were exchanged for options topurchase Xyratex Limited shares in same ratios as the exchange of shares. As described above, optionsto purchase Xyratex Group Limited shares have been accounted for as variable awards over juniorstock. Compensation expense relating to these awards, to the extent vested, has been recognized in theCompany’s Consolidated Statements of Operations on the removal of transferability restrictions overthe underlying shares on the effectiveness of the scheme of arrangement in June 2004. In addition, foroptions which were exercised and then sold to HgCapital in September 2003, compensation expense of$3,656 was recognized in the year ended November 30, 2003 as a result of the related removal oftransferability restrictions over the shares sold. Of this amount $758 is included in discontinuedoperations.The Company and Credit Suisse First Boston, the managing underwriter for the IPO, have agreedto impose a limit on the number of common shares over which options may be granted, to the effectthat the total number of common shares over which options may be granted under all of theCompany’s share option, share purchase, restricted stock and stock bonus award plans shall not, in anyconsecutive ten year period, commencing after the IPO, exceed 5,632,648. Lapsed and surrenderedoptions are disregarded for these purposes. At January 31, 2006, options over 1,503,000 common shareshad been granted since the IPO. Where the number of options which can be granted under a specificplan is subject to a limit then these limits are stated below.During the year ended November 30, 2005, 394 common shares were issued to employees to satisfyshare options and an employee share purchase plan.On January 10, 2005 the Company granted 953 options over common shares to its employees at anexercise price of $14.31, being the market price on that date.On May 23, 2005 the Company agreed to grant 90 options over common shares to new employeesat an exercise price of $15.77, being the market price on that date. In addition 5 restricted shares wereawarded to one employee at no cost.F-29