Dell 2009 Annual Report Download - page 93

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Compensation expense for restricted stock awards with a service condition is recognized on a straight-line basis over the vesting term.
Compensation expense for performance-based restricted stock awards is recognized on an accelerated multiple-award approach based on
the most probable outcome of the performance condition.
Acceleration of Vesting of Options — On January 23, 2009, Dell's Board of Directors approved the acceleration of the vesting of
unvested "out-of-the-money" stock options (options that have an exercise price greater than the current market stock price) with exercise
prices equal to or greater than $10.14 per share for approximately 2,800 employees holding options to purchase approximately 21 million
shares of common stock. Dell concluded the modification to the stated vesting provisions was substantive after Dell considered the
volatility of its share price and the exercise price of the amended options in relation to recent share values. Because the modification was
considered substantive, the remaining unearned compensation expense of $104 million was recorded as an expense in Fiscal 2009. The
weighted-average exercise price of the options that were accelerated was $21.90.
Cash Payment for Expired Stock Options — Dell decided to pay cash to current and former employees who held "in-the-money" stock
options (options that have an exercise price less than the current market stock price) that expired during the period of unexercisability.
During Fiscal 2008, Dell made payments of approximately $107 million, which were expensed, relating to in-the-money stock options
that expired in the second and third quarters of Fiscal 2008.
General Information
Stock Option Activity — The following table summarizes stock option activity for the Stock Plans during Fiscal 2010:
Weighted-
Weighted- Average
Number Average Remaining Aggregate
of Exercise Contractual Intrinsic
Options Price Term Value
(in millions) (per share) (in years) (in millions)
Options outstanding — January 30, 2009 230 $ 31.85
Granted 11 9.83
Exercised (0) 12.05
Forfeited (0) 14.73
Cancelled/expired (36) 35.59
Options outstanding — January 29, 2010 205 $ 30.00
Vested and expected to vest (net of estimated forfeitures) — January 29, 2010(a) 204 $ 30.15 3.5 $ 35
Exercisable — January 29, 2010(a) 194 $ 31.16 3.1 $ 1
(a) For options vested and expected to vest and options exercisable, the aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the
difference between Dell's closing stock price on January 29, 2010, and the exercise price multiplied by the number of in-the-money options) that would have been
received by the option holders had the holders exercised their options on January 29, 2010. The intrinsic value changes based on changes in the fair market value of
Dell's common stock.
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