Express Scripts 2009 Annual Report Download - page 83

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Express Scripts 2009 Annual Report
The following table presents amounts related to stock-based compensation:
(in millions, except per share data)
SSRs and Stock
Options
Restricted Stock
and Performance
Shares
Year ended December 31, 2009
Stock-based compensation:
Expense, pre-tax
$ 28.6
$ 16.2
Expense, after tax
18.0
10.2
Expense per diluted share
0.07
0.04
As of December 31, 2009
Unamortized portion(1)
$ 21.7
$ 16.7
Year ended December 31, 2008
Stock-based compensation:
Expense, pre-tax
$ 23.8
$ 16.3
Expense, after tax
15.3
10.5
Expense per diluted share
0.06
0.04
As of December 31, 2008
Unamortized portion(1)
$ 20.6
$ 14.2
(1) We have $0.3 million and $0.4 million of unearned compensation related to unvested shares that are part of our deferred compensation plan as
of December 31, 2009 and 2008, respectively.
The weighted average remaining recognition period for SSRs and stock options is 1.7 years, and for
restricted stock and performance shares is 1.6 years.
For the year ended December 31, 2009, the tax benefit related to employee stock compensation was $13.4
million, and is classified as a financing cash inflow on the Statement of Cash Flows.
The fair value of options and SSRs granted is estimated on the date of grant using a Black-Scholes multiple
option-pricing model with the following weighted average assumptions:
2009
2008
2007
Expected life of option
3-5 years
3-5 years
3-5 years
Risk-free interest rate
1.3%-2.4%
1.6%-3.4%
3.8%-5.2%
Expected volatility of stock
35%-39%
30%-37%
29%-31%
Expected dividend yield
None
None
None
The Black-Scholes model requires subjective assumptions, including future stock price volatility and
expected time to exercise, which greatly affect the calculated values. The expected term and forfeiture rate of
options granted is derived from historical data on employee exercises and post-vesting employment termination
behavior, as well as expected behavior on outstanding options. The risk-free rate is based on the U.S. Treasury rates
in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of our
stock price. These factors could change in the future, which would affect the stock-based compensation expense in
future periods.
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