Classmates.com 2007 Annual Report Download - page 117

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UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. STOCK-BASED COMPENSATION PLANS (Continued)
of the Company's common stock upon vesting. The restricted stock units vest one-third annually over the three-year period beginning
February 15, 2008.
Effective February 15, 2008, the Company approved grants of 1.2 million restricted stock units with a fair value equal to $14.2 million to
the Company's employees. The restricted stock units vest twenty-five percent on February 15, 2009 and quarterly thereafter for three years.
Effective February 15, 2008, 0.2 million shares of common stock with a fair value equal to $2.4 million were issued to certain members of
senior management and certain of the Company's employees.
Employee Stock Purchase Plan
The Company has a 2001 Employee Stock Purchase Plan, which expires in the year 2011, and under which approximately 6.8 million
shares of the Company's common stock were reserved for issuance under the plan at December 31, 2007. At December 31, 2007, 3.0 million
shares were available for issuance. Under the employee stock purchase plan, each eligible employee may authorize payroll deductions of up to
15% of their compensation to purchase shares of common stock on two "purchase dates" each year at a purchase price per share equal to 85% of
the lower of (i) the closing market price per share of the Company's common stock on the employee's entry date into the two-
year offering period
in which the purchase date occurs or (ii) the closing market price per share on the purchase date. Each offering period has a 24-month duration
and purchase intervals of six months.
The fair value of employee stock purchase plan shares was estimated using the Black-Scholes option pricing model with the following
weighted-average assumptions:
The assumptions presented in the table above represent the weighted average of the applicable assumptions used to value employee stock
purchase plan shares. The Company calculates expected volatility based on historical volatility of the Company's common stock. The expected
term represents the amount of time remaining in the 24-month offering period. The risk-free interest rate assumed in valuing the employee stock
purchase plan shares is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term. The Company determines the
expected dividend yield percentage by dividing the expected annual dividend by the closing market price of United Online common stock at the
date of grant.
For the years ended December 31, 2007, 2006 and 2005, the Company recognized approximately $1.7 million, $1.9 million and $0,
respectively, of stock-based compensation related to the employee stock purchase plan. Total unrecognized compensation cost related to the
employee stock purchase plan at December 31, 2007 was approximately $1.0 million and was expected to be recognized over a weighted-
average period of 0.6 years.
F-35
Year Ended
December 31,
2007
2006
Risk
-
free interest rate
4.5
%
3.8
%
Expected term (in years)
0.5
-
2.0
0.5
-
2.0
Dividend yield
6.4
%
8.3
%
Volatility
38.7
%
52.1
%