MoneyGram 2008 Annual Report Download - page 133

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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
historical volatility of the price of the Company's common stock since the spin-off on June 30, 2004. The Company uses historical
information to estimate the expected term and forfeiture rates of options. The expected term represents the period of time that options are
expected to be outstanding, while the forfeiture rate represents the number of options that will be forfeited by grantees due to termination
of employment. In addition, the Company considers any expectations regarding future activity which could impact the expected term and
forfeiture rate. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at
the time of grant. Compensation cost, net of expected forfeitures, is recognized using a straight-line method over the vesting or service
period. The information provided in the following table is not applicable to 2008 as the Company did not grant any stock option awards.
The weighted-average grant date fair value of an option granted during 2007 and 2006 was $11.47 and $10.41, respectively.
2007 2006
Expected dividend yield 0.7% 0.6%
Expected volatility 29.1% 26.5%
Risk-free interest rate 4.6% 4.7%
Expected life 6.5 years 6.5 years
Following is a summary of stock option activity for 2008:
Weighted-
Weighted Average Aggregate
Average Remaining Intrinsic
Exercise Contractual Value
Shares Price Term ($000)
Options outstanding at December 31, 2007 4,077,300 $ 20.63
Granted — —
Exercised — —
Forfeited (1,107,174) 21.02
Options outstanding at December 31, 2008 2,970,126 $ 20.49 3.66 years $ —
Vested or expected to vest at December 31, 2008 2,936,076 $ 20.40 3.61 years $ —
Options exercisable at December 31, 2008 2,652,048 $ 19.78 3.31 years $ —
Restricted Stock and Performance-Based Restricted Stock — The Company has granted both restricted stock and performance-based
restricted stock. The vesting of restricted stock is typically three years from the date of grant. The vesting of performance-based restricted
stock is contingent upon the Company obtaining certain financial thresholds established on the grant date. Provided the incentive
performance targets established in the year of grant are achieved, the performance-based restricted stock awards vest in a three-year
period from the date of grant in an equal number of shares each year. Vesting could accelerate if performance targets are met at certain
achievement levels. Future vesting in all cases is subject generally to continued employment with MoneyGram. Holders of restricted
stock and performance-based restricted stock have the right to receive dividends and vote the shares, but may not sell, assign, transfer,
pledge or otherwise encumber the stock. In connection with the spin-off, the Company's former Chairman of the Board was granted a
restricted stock award under the 2004 Omnibus Incentive Plan for 50,000 shares of common stock, of which 25,000 shares vested
immediately and 25,000 shares vested on June 30, 2006. On June 30, 2005, the Company's former Chairman of the Board was granted a
restricted stock award under the 2005 Omnibus Incentive Plan for 50,000 shares of common stock, of which 25,000 shares vested
immediately and 25,000 shares vested in May 2006.
F-47