Health Net 2009 Annual Report Download - page 128

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A summary of RSU and PSU activity under our various plans as of December 31, 2009, and changes during
the year then ended is presented below:
Number of
Restricted
Stock Units
and
Performance
Share Units
Weighted
Average
Grant-Date
Fair Value
Weighted
Average
Purchase
Price
Weighted Average
Remaining
Contractual Term
(Years)
Aggregate
Intrinsic Value
Outstanding at January 1, 2009 ......... 1,969,079 $49.59 $0.001
Granted ............................ 926,649 16.81 0.001
Vested ............................. (290,792) 53.61 0.001
Forfeited ........................... (195,875) 44.79 0.001
Outstanding at December 31, 2009 ...... 2,409,061 $37.06 $0.001 8.14 $56,104,622
Expected to vest at December 31, 2009
(reflecting estimated forfeiture rates
effective in 2009) .................. 2,085,008 $37.78 $0.001 8.08 $48,557,755
The fair values of restricted common stock, RSUs and PSUs are determined based on the market value of
the shares on the date of grant. We did not grant any restricted common stock during the years ended
December 31, 2009, 2008 and 2007. The aggregate intrinsic values of restricted shares vested during the years
ended December 31, 2009, 2008 and 2007, were $0, $40 thousand and $4.6 million, respectively. The weighted-
average grant-date fair values of RSUs and PSUs granted during the years ended December 31, 2009, 2008 and
2007 were $16.81, $47.47 and $54.13, respectively. The aggregate intrinsic values of RSUs and PSUs vested
during the years ended December 31, 2009, 2008 and 2007, were $4.5 million, $0.5 million and $10 thousand,
respectively.
During the years ended December 31, 2009, 2008 and 2007, compensation expense recorded for stock
options was $2.9 million, $4.8 million and $9.3 million, respectively. During the years ended December 31,
2009, 2008 and 2007, compensation expense recorded for restricted common stock was $0, $2,000 and $2,000,
respectively. During the years ended December 31, 2009, 2008 and 2007, compensation expense recorded for
RSUs and PSUs was $8.8 million, $19.3 million and $15.0 million, respectively. As of December 31, 2009, the
total remaining unrecognized compensation cost related to non-vested stock options and RSUs and PSUs was
$1.4 million and $19.3 million, respectively, which is expected to be recognized over a weighted-average period
of 1.19 years and 1.26 years, respectively.
Under the Plans, employees and non-employee directors may elect for the Company to withhold shares to
satisfy minimum statutory federal, state and local tax withholding and/or exercise price obligations, as
applicable, arising from the exercise of stock options. For certain other equity awards, the Company has the right
to withhold shares to satisfy any tax obligations that may be required to be withheld or paid in connection with
such equity award, including any tax obligation arising on the vesting date. During the year ended December 31,
2009, we withheld 114,678 shares of common stock to satisfy tax withholding and exercise price obligations
arising from stock option exercises and the vesting of RSUs.
We become entitled to an income tax deduction in an amount equal to the taxable income reported by the
holders of the stock options, restricted shares, RSUs and PSUs when vesting occurs, the restrictions are released
and the shares are issued. Stock options, restricted common stock, RSUs and PSUs are forfeited if the employees
terminate their employment prior to vesting.
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