The weighted average remaining contractual life of stock options outstanding at December 31, 1998, 1999, and 2000 was 8.7, 8.6, and 8.1 years, respectively. As of December 31, 1998, 1999, and 2000, options available for future grant under the Plan and the Directors’ Plan were approximately 1,105,000, 2,261,000, and 4,025,000, respectively. SFAS No. 123,  Accounting for Stock-Based Compensation , requires the measurement of the fair value of stock options or warrants to be included in the statement of income or disclosed in the notes to financial statements. Forrester has determined that it will continue to account for stock-based compensation for employees under Accounting Principles Board Opinion No. 25 and elect the disclosure-only alternative under SFAS No. 123. Forrester has computed the value of options granted during the years ended December 31, 1998, 1999, and 2000 using the Black-Scholes option pricing model prescribed by SFAS No. 123, and the following assumptions: 1998 1999 2000 Risk-free interest rate 5.28% 5.54% 6.22% Expected dividend yield — — — Expected lives 5 years 5 years 3 years Expected volatility 40% 55% 64% If compensation cost for Forrester’s stock option plans had been determined consistent with SFAS No. 123, net income for the years ended December 31, 1998, 1999, and 2000 would have been approximately as follows (in thousands, except per share data): Years Ended December 31, 1998 1999 2000 As reported — Net income $7,547 $10,981 $21,614 Basic net income per common share $ 0.44 $ 0.61 $ 1.03 Diluted net income per common share $ 0.40 $ 0.55 $ 0.88 Pro forma — Net income $4,569 $ 2,902 $ 9,093 Basic net income per common share $ 0.27 $ 0.16 $ 0.43 Diluted net income per common share $ 0.24 $ 0.14 $ 0.37 In January 1998, Forrester’s founder and principal shareholder granted certain key employees options to purchase 2,000,000 shares of his common stock. The options have an exercise price of $9.57 and vest as follows: one-thirty-sixth of the total number of options granted monthly through January 28, 1999 and one- third of the total number of options granted on and after each of January 28, 2000 and January 28, 2001. As of December 31, 2000, approximately 808,000 options remained outstanding, of which 141,000  were exercisable.