Citrix 2012 Annual Report Download - page 94

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CITRIX SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-28
foreseeable future. Accordingly, the Company used a dividend yield of zero in its option pricing model. The weighted-average
fair value of stock options granted during 2012, 2011 and 2010 was $23.95, $29.91 and $13.74, respectively.
The assumptions used to value option grants under the 2005 Plan are as follows:
Stock options granted during
2012 2011 2010
Expected volatility factor 0.38 - 0.43 0.38 - 0.50 0.31 - 0.37
Approximate risk free interest rate 0.5% - 0.7% 0.6% - 1.1% 0.9% - 1.6%
Expected term (in years) 3.91 3.27 - 3.91 3.06 - 3.27
Expected dividend yield 0% 0% 0%
Non-vested Stock Units
Market and Service Condition Stock Units
In March 2012, the Company granted senior level employees non-vested stock unit awards representing, in the aggregate,
418,809 non-vested stock units, based on certain target market and service conditions. The number of non-vested stock units
underlying each award will be determined within sixty days of the calendar year following the end of a three-year performance
period ending December 31, 2014. The attainment level under the award will be based on the Company's total return to
stockholders over the performance period compared to the return on the Nasdaq Composite Total Return Index (the "XCMP").
If the Company's return is positive and meets or exceeds the indexed return, the number of non-vested stock units issued will be
based on interpolation, with the maximum number of non-vested stock units issuable pursuant to the award capped at 200% of
the target number of non-vested stock units set forth in the award agreement if the Company's return exceeds the indexed return
by 40% or more. If the Company's return over the performance period is positive but underperforms the index, a number of
non-vested stock units will be issued, below the target award, based on interpolation; however, no non-vested stock units will
be issued if the Company's return underperforms the index by more than 20% over the performance period. In the event the
Company's return to stockholders is negative but still meets or exceeds the indexed return, only 75% of the target award shall
be issued. The extent to which the awardee will vest in the award, if at all, if the awardee is not employed by the Company at
the end of the performance period is dependent upon the timing and character of the termination as provided in the award
agreement. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company's common stock.
The market condition requirements are reflected in the grant date fair value of the award, and the compensation expense
for the award will be recognized assuming that the requisite service is rendered regardless of whether the market conditions are
achieved. The grant date fair value of the non-vested performance stock unit awards was determined through the use of a
Monte Carlo simulation model, which utilized multiple input variables that determined the probability of satisfying the market
condition requirements applicable to each award as follows:
Expected volatility factor 0.21 - 0.39
Risk free interest rate 0.47%
Expected dividend yield 0%
The range of expected volatilities utilized was based on the historical volatilities of the Company's common stock and
the XCMP. The Company chose to use historical volatility to value these awards because historical stock prices were used to
develop the correlation coefficients between the Company and the XCMP in order to model the stock price movements. The
volatilities used were calculated over the most recent 2.75 year period, which was the remaining term of the performance
period at the date of grant. The risk free interest rate was based on the implied yield available on U.S. Treasury zero-coupon
issues with remaining terms equivalent to the remaining performance period. The Company does not intend to pay dividends on
its common stock in the foreseeable future. Accordingly, the Company used a dividend yield of zero in its model. The estimated
fair value of each award was $89.95 as of the date of grant.