Computer Associates 2011 Annual Report Download - page 91

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Additional information with respect to stock option plan activity is as follows:
(IN MILLIONS)
NUMBER
OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
Outstanding at March 31, 2008 16.8 $ 27.70
Exercised (0.4) 18.85
Expired or terminated (2.3) 32.09
Outstanding at March 31, 2009 14.1 $ 27.21
Granted 0.1 20.87
Exercised (0.6) 18.96
Expired or terminated (2.3) 41.94
Outstanding at March 31, 2010 11.3 $ 24.65
Granted 1.2 19.34
Exercised (0.5) 18.81
Expired or terminated (4.0) 27.05
Outstanding at March 31, 2011 8.0 $ 23.03
(IN MILLIONS)
NUMBER
OF SHARES
WEIGHTED AVERAGE
EXERCISE PRICE
Options exercisable at:
March 31, 2009 13.5 $27.46
March 31, 2010 11.2 $24.67
March 31, 2011 6.8 $23.66
The following table summarizes stock option information at March 31, 2011:
RANGE OF EXERCISE PRICES SHARES
AGGREGATE
INTRINSIC
VALUE
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE
WEIGHTED
AVERAGE
EXERCISE
PRICE SHARES
AGGREGATE
INTRINSIC
VALUE
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE
WEIGHTED
AVERAGE
EXERCISE
PRICE
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
(SHARES AND AGGREGATE INTRINSIC VALUE IN MILLIONS; WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE IN YEARS)
$ 1.37 — $ 20.00 2.1 $15.9 4.3 $16.74 1.0 $10.4 2.0 $13.77
$ 20.01 — $ 25.00 2.6 5.5 2.4 22.02 2.5 5.3 2.4 22.04
$ 25.01 — $ 30.00 3.0 — 3.1 27.42 3.0 — 3.1 27.42
$ 30.01 — over 0.3 — 3.3 31.89 0.3 — 3.3 31.89
8.0 $21.4 3.2 $23.03 6.8 $15.7 2.7 $23.66
The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. The Company
believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in
calculating the fair value of the Company’s stock options. Estimates of fair value are not intended to predict actual future
events or the value ultimately realized by employees who receive equity awards.
No options were granted in fiscal year 2009. The weighted average estimated values of employee stock option grants, as well
as the weighted average assumptions that were used in calculating such values during fiscal year 2011 and 2010 were based
on estimates at the date of grant as follows:
2011 2010
YEAR ENDED MARCH 31,
Weighted average fair value $5.55 $6.81
Dividend yield 0.83% 0.77%
Expected volatility factor
(1)
34% 33%
Risk-free interest rate
(2)
1.8% 2.3%
Expected life (in years)
(3)
4.5 6.0
(1) Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market
prices of the Company’s traded options.
(2) The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.
(3) The expected life is the number of years the Company estimates, based primarily on historical experience, that options will be outstanding prior to exercise. For stock options granted in fiscal year
2011, the Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term), due to changes in the vesting terms, the
contractual lives and the population of employees granted options compared with the Company’s historical grants.
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