DIRECTV 2010 Annual Report Download - page 114

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
the options are based on the U.S. Treasury yield curve in effect at the time of The following table presents amounts recorded related to share-based
grant. The expected option life is based on the contractual life of the awards. compensation:
December 31, 2010 December 31, 2009 For the Years Ended
December 31,
Average estimated fair value per equity 2010 2009 2008
instrument assumed ............... $22.52 $15.19 (Dollars in Millions)
Average exercise price per equity instrument Share-based compensation expense recognized ........... $82 $55 $ 51
assumed ....................... $19.34 $20.06 Tax benefits associated with share-based compensation
Expected stock volatility .............. 26.5% 25.2% expense .................................. 31 21 19
Range of risk-free interest rates ......... 0.07 - 2.01% 0.19 - 3.34% Actual tax benefits realized for the deduction of share-based
Range of expected option lives (in years) . . . 0.1 - 6.4 0.6 - 7.4 compensation expense ......................... 60 42 43
Proceeds received from stock options exercised .......... 38 35 105
The following table presents the estimated weighted average fair value for stock
options granted during the year ended December 31, 2010 under the DIRECTV As of December 31, 2010, there was $90 million of total unrecognized
Plan using the Black-Scholes valuation model along with the assumptions used in compensation expense related to unvested restricted stock units and stock options
the fair value calculations. Expected stock volatility is based primarily on the that we expect to recognize as follows: $56 million in 2011 and $34 million in
historical volatility of our common stock. The risk-free rate for periods within the 2012.
contractual life of the option is based on the U.S. Treasury yield curve in effect at Beginning in 2009, we implemented a net exercise plan pursuant to which we
the time of grant. The expected option life is based on historical exercise behavior only issue new shares in connection with employee option exercises equal to the
and other factors. intrinsic value of the exercised award on the exercise date reduced by the amount of
2010 statutory employee withholding taxes and divided by the current market price of
the our common stock. As a result, we no longer receive cash in connection with
Estimated fair value per option granted ....................... $12.36
the exercise of most stock options, but rather issue significantly fewer shares. In
Average exercise price per option granted ...................... $33.74
addition, the company is required to pay the employee withholding taxes to taxing
Expected stock volatility ................................. 26.9%
authorities, the cash payments for which are reported in ‘‘Taxes paid in lieu of
Risk-free interest rate ................................... 3.35%
shares issued for share-based compensation’’ in the Consolidated Statements of Cash
Expected option life (in years) ............................. 7.0
Flows.
There were no stock options granted under the DIRECTV Plan during the
years ended December 31, 2008 and 2009.
92