Discover 2011 Annual Report Download - page 138
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126
Stock Option Activity. The following table sets forth the activity concerning stock option activity during the year ended
November 30, 2011:
Options outstanding at November 30, 2010
Granted (1)
Exercised
Expired
Options outstanding at November 30, 2011
Vested and exercisable at November 30, 2011
Number of
Shares
3,912,399
—
(1,182,591)
(562,346)
2,167,462
2,167,462
Weighted
Average
Exercise Price
$19.49
$18.17
$24.35
$18.95
$18.95
Weighted-Average
Remaining
Contractual Term
(in years)
2.52
2.14
2.14
Aggregate
Intrinsic Value (in
thousands)
$11,705
$11,705
(1) No stock options have been granted by the Company since its spin-off from Morgan Stanley.
Cash received from the exercise of stock options was $21.5 million and the income tax benefit realized from the exercise
of stock options was $1.2 million for the year ended November 30, 2011.
The following table summarizes the total intrinsic value of options exercised and total fair value of options vested
(dollars in thousands):
Intrinsic value of options exercised
Grant date fair value of options vested
For the Years Ended November 30,
2011
$ 8,500
$—
2010
$29
$ 844
2009
$17
$ 4,245
As of November 30, 2011, there was no unrecognized compensation cost related to non-vested stock options granted
under the Company's Omnibus Plan, as all these options have vested.
The Company utilized the Black-Scholes pricing model to estimate the fair value of each option at its date of grant. The
fair value was amortized on a straight-line basis, net of estimated forfeitures, over the requisite service periods of the awards,
which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect
to selected model inputs. Since all options were granted prior to the Company's spin-off from Morgan Stanley, the expected
option life of stock options and the expected dividend yield of stock were determined based upon Morgan Stanley's historical
experience. The expected stock price volatility was determined based upon Morgan Stanley's historical stock price data over a
time period similar to the expected option life. The risk-free interest rate was based on U.S. Treasury Strips with a remaining
term equal to the expected life assumed at the date of grant.
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