DIRECTV 2010 Annual Report Download - page 113

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
The total fair value of restricted stock units vested and distributed was calculations. Expected stock volatility is based primarily on the historical volatility
$81 million during the year ended December 31, 2010, $52 million during the of our common stock. The risk-free rate for periods within the contractual lives of
year ended December 31, 2009 and $72 million during the year ended the options are based on the U.S. Treasury yield curve in effect at the time of
December 31, 2008. grant. The expected option life is based on historical exercise behavior, the
contractual life of the awards, and other factors.
Stock Options November 19, 2009
The Compensation Committee has also granted stock options to acquire our Average estimated fair value per equity instrument assumed .... $14.17
Class A common stock under our stock plans to certain of our employees and Average exercise price per equity instrument assumed ........ $18.90
executives. The exercise price of options granted is equal to at least 100% of the Expected stock volatility ........................... 24.73%
fair market value of the common stock on the date the options were granted. These Range of risk-free interest rates ...................... 0.16 - 2.87%
nonqualified options generally vest over one to five years, expire seven to ten years Range of expected option lives (in years) ................ 0.7 - 7.5
from date of grant and are subject to earlier termination under certain conditions.
The intrinsic value of awards assumed under the LEI Plan which were
Changes in the status of outstanding options were as follows: exercised during the period was $145 million.
Weighted- The holders of the majority of the equity instruments assumed as a result of
Weighted- Average
Shares Average Remaining Aggregate the Liberty Transaction did not become DIRECTV employees or directors.
Under Exercise Contractual Intrinsic Accordingly, we recognize those equity instruments as a liability that is subject to
Option Price Term Value
fair value measurement at each reporting date pursuant to accounting rules for
(in millions)
non-employee awards. We include that liability within ‘‘Other liabilities and
Outstanding at January 1, 2010 . . . 29,422,437 $31.15
deferred credits’’ in our Consolidated Balance Sheets. Of the 16.7 million equity
Granted ................... 1,011,100 33.74
instruments assumed on November 19, 2009, 8.8 million were held by persons
Exercised ................... (20,140,221) 25.05
other than employees or directors. As of December 31, 2010, 1.0 million
Forfeited or expired ............ (5,740,639) 40.44
non-employee awards remain outstanding with a fair value of approximately
Outstanding at December 31, 2010 . 4,552,677 23.41 4.3 $ 76 $22 million. During the year ended December 31, 2010, we recorded a net loss of
Exercisable at December 31, 2010 . . 3,878,610 $21.61 3.5 $ 72 $11 million to ‘‘Other, net’’ in the Consolidated Statements of Operations for gains
and losses recognized for exercised options and the adjustment of the liability to fair
The total intrinsic value of options exercised was $221 million during the year value as of December 31, 2010.
ended December 31, 2010, $144 million during the year ended December 31, The following table presents the estimated weighted average fair value as of
2009 and $38 million during the year ended December 31, 2008, based on the December 31, 2010 and December 31, 2009 for the equity instruments issued to
intrinsic value of individual awards on the date of exercise. persons other than employees and directors carried as a liability using the Black-
The following table presents the estimated weighted average fair value as of Scholes valuation model along with the assumptions used in the fair value
November 19, 2009 of the 16.7 million stock options and stock appreciation rights calculations. Expected stock volatility is based primarily on the historical volatility
assumed under the LEI Plan as part of the Liberty Transaction using the Black- of our common stock. The risk-free rate for periods within the contractual lives of
Scholes valuation model, along with the assumptions used in the fair value
91