HP 2012 Annual Report Download - page 104

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 2: Stock-Based Compensation (Continued)
and 2011. The aggregate intrinsic value is the difference between HP’s closing stock price on the last
trading day of fiscal 2012 and fiscal 2011 and the exercise price, multiplied by the number of
in-the-money options. Total intrinsic value of options exercised in fiscal 2012, 2011 and 2010 was
$0.2 billion, $0.7 billion and $1.3 billion, respectively. Total grant date fair value of options vested and
expensed in fiscal 2012, 2011 and 2010 was $104 million, $95 million and $93 million, respectively, net
of taxes.
Information about options outstanding at October 31, 2012 was as follows:
Options Outstanding Options Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Remaining Exercise Exercise
Shares Contractual Price Shares Price
Range of Exercise Prices Outstanding Life Per Share Exercisable Per Share
In thousands In years In thousands
$0-$9.99 .......................... 1,097 5.3 $ 6 994 $ 6
$10-$19.99 ........................ 8,441 5.3 $14 4,622 $14
$20-$29.99 ........................ 36,396 3.6 $24 22,369 $23
$30-$39.99 ........................ 21,962 1.4 $32 21,645 $32
$40-$49.99 ........................ 18,313 2.3 $43 17,945 $43
$50-$59.99 ........................ 810 4.2 $52 585 $52
$60 and over ....................... 277 1.5 $75 277 $75
87,296 3.0 $29 68,437 $31
At October 31, 2012, there was $157 million of unrecognized pre-tax stock-based compensation
expense related to stock options, which HP expected to recognize over a weighted-average vesting
period of 1.8 years. At October 31, 2011, there was $264 million of unrecognized pre-tax stock-based
compensation expense related to stock options, which HP expected to recognize over a weighted-
average vesting period of 2.3 years.
Performance-Based Restricted Units
For PRU awards granted in fiscal year 2012, HP estimates the fair value of the Target Shares using
HP’s closing stock price on the measurement date. The weighted-average fair value per share for the
first year of the three-year performance period applicable to PRUs granted in fiscal year 2012 was
$27.00. The estimated fair value of the Target Shares for the second and third years for PRUs granted
in fiscal year 2012 will be determined on the measurement date applicable to those PRUs, which will
occur during the period that the annual performance goals are approved for those PRUs, and the
expense will be amortized over the remainder of the applicable three-year performance period.
For PRU awards granted prior to fiscal year 2012, HP estimates the fair value of the Target Shares
subject to those awards using the Monte Carlo simulation model, as the TSR modifier represents a
market condition. The following weighted-average assumptions, in addition to projections of market
96