GNC 2010 Annual Report Download - page 116

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
average to estimate the expected volatility. The assumptions used in the Company's Black-Scholes valuation related to stock option grants
made during the year ended December 31, 2009, 2008 and 2007 were as follows:
2009 2008 2007
Dividend yield 0.00% 0.00% 0.00%
Expected option life 7.5 years 7.5 years 7.5 years
Volatility factor percentage of market price 34.20%-44.60% 26.00%-28.40% 23.00%-25.00%
Discount rate 0.43%-3.28% 3.08%-3.64% 4.16%-4.96%
As the Black-Scholes option valuation model utilizes certain estimates and assumptions, the existing models do not necessarily represent
the definitive fair value of options for future periods.
Predecessor
In 2006, the Board of Directors of the Company and GNC Corporation approved and adopted the GNC Corporation 2006 Omnibus Stock
Incentive Plan (the "2006 Plan"). In 2003 the boards approved and adopted the GNC Corporation (f/k/a General Nutrition Centers Holding
Company) 2003 Omnibus Stock Incentive Plan (the "2003 Plan" and, together with the 2006 Plan, the "Plans"). The purpose of the Plans was
to enable the Company to attract and retain highly qualified personnel who would contribute to the success of the Company. The Plans
provided for the granting of stock options, stock appreciation rights, restricted stock, deferred stock and performance shares. The Plans were
available to certain eligible employees, directors, consultants or advisors as determined by the administering committee of the boards. The total
number of shares of GNC Corporation's common stock reserved and available for the 2006 Plan was 3.8 million shares and under the 2003
Plan was 4.0 million shares. Stock options under the Plans generally were granted at fair market value, vested over a four-year vesting
schedule and expired after seven years from date of grant. If stock options were granted at an exercise price that was less than fair market
value at the date of grant, compensation expense was recognized immediately for the intrinsic value. No stock appreciation rights, restricted
stock, deferred stock or performance shares were granted under the Plans as of December 31, 2006.
The standard on stock compensation requires that the cost resulting from all share-based payment transactions be recognized in the
financial statements. For the period from January 1, 2007 to March 15, 2007, the Company recognized total compensation expense of
$4.1 million, of which $3.8 million related to the acceleration of the vesting of these options. The Company recorded $47.0 million as a reduction
in equity on March 15, 2007 related to the cancellation of these options.
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