Cablevision 2013 Annual Report Download - page 173

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share amounts)
F-64
Cash received from stock option exercises for the years ended December 31, 2013, 2012 and 2011 was
$18,120, $18,722 and $6,471, respectively.
Valuation Assumptions - Stock Options and Stock Appreciation Rights
Cablevision calculates the fair value of each option award on the date of grant and for each stock
appreciation right on the date of grant and at the end of each reporting period using the Black-Scholes
option pricing model. Cablevision's computation of expected life was determined based on historical
experience of similar awards, giving consideration to the contractual terms of the share-based awards and
vesting schedules, or by using the simplified method (the average of the vesting period and option term),
if applicable. The interest rate for periods within the contractual life of the stock option is based on
interest yields for U.S. Treasury instruments in effect at the time of grant. For stock appreciation rights,
the interest rate is based on interest yields for U.S. Treasury instruments in effect at the time of grant and
at the end of each reporting period. Cablevision's computation of expected volatility is based on historical
volatility of its common stock.
In the first quarter of 2013, Cablevision granted options that are scheduled to cliff vest in three years and
expire 10 years from the date of grant. In the first quarter of 2012, Cablevision granted options that are
scheduled to vest over a two year period in 50% annual increments based on the achievement of certain
performance criteria and expire 10 years from the date of grant. Cablevision calculated the fair value of
each option award on the date of grant using the Black-Scholes option pricing model. Cablevision's
computation of expected life was determined based on the simplified method (the average of the vesting
period and option term) due to the Company's lack of recent historical data for similar awards.
Cablevision had not, in its recent history, granted options with performance criteria or with similar terms.
Additionally, these options were issued subsequent to a change in Cablevision's structure in connection
with the AMC Networks Distribution and the MSG Distribution, whereby Cablevision distributed to its
stockholders all of the outstanding common stock of The Madison Square Garden Company ("Madison
Square Garden"), a company which owns the sports, entertainment and media businesses previously
owned and operated by the Company's Madison Square Garden segment (the "MSG Distribution").
Cablevision's computation of expected volatility is based on historical volatility of its common stock.
The following assumptions were used to calculate the fair values of stock option awards granted in the
first quarter of 2013 and 2012:
2013 2012
Risk-free interest rate ................................................................................ 1.25% 1.14%
Expected life (in years) ............................................................................. 6.5 5.75
Dividend yield ........................................................................................... 3.86% 3.52%
Volatility ................................................................................................... 42.31% 43.20%
Grant date fair value .................................................................................. $3.96 $4.06
There were no stock options granted during 2011.