Memorex 2012 Annual Report Download - page 72

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
other similar events. Awards may be granted under the 2011 Incentive Plan until the earlier to occur of May 3, 2021 or the
date on which all shares available for awards under the 2011 Incentive Plan have been granted; provided, however, that
incentive stock options may not be granted after February 10, 2021. Stock-based compensation awards issued under the
2011 Incentive Plan generally have a term of ten years and, for employees, vest over a three-year period. Awards issued to
directors under this plan become fully exercisable on the first anniversary of the grant date. Stock options granted under these
plans are not incentive stock options. Exercise prices of awards issued under these plans are equal to the fair value of the
Company’s stock on the date of grant. As of December 31, 2012, we had 2,237,119 of stock-based compensation awards
consisting of stock options and restricted stock outstanding under the 2011 Incentive Plan. As of December 31, 2012 there
were 2,098,474 shares available for grant under our 2011 Incentive Plan.
On February 8, 2013, the Board adopted, subject to shareholder approval, amendments to the Imation Corp. 2011
Incentive Plan (the “Stock Plan Amendments”). The purpose of the Stock Plan Amendments is, among other things, to permit
the Company to continue to grant awards under the 2011 Incentive Plan beyond the date when the currently authorized
shares have been exhausted, to give the Compensation Committee additional flexibility in granting performance-based
awards and remove the limitation on the number of shares that can be issued pursuant to full value awards.
Stock Options
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The
assumptions used in the valuation model are supported primarily by historical indicators and current market conditions.
Volatility was calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free
rate of return was determined by using the U.S. Treasury yield curve in effect at the time of grant. The expected term was
calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable
trends or changes in recipients’ behavior. In determining the expected term, we considered the vesting period of the awards,
the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring
initiatives and the relative weight for each of these factors. The dividend yield was based on the latest dividend payments
made on or announced by the date of the grant.
The following table summarizes our weighted average assumptions used in the valuation of options for the years ended
December 31:
2012 2011 2010
Volatility ............................................................ 45% 44% 43%
Risk-free interest rate ................................................... 1.07% 2.13% 2.49%
Expected life (months) .................................................. 71 70 66
Dividend yield ........................................................ —% —% —%
69