Orbitz 2008 Annual Report Download - page 111

Download and view the complete annual report

Please find page 111 of the 2008 Orbitz annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. Equity-Based Compensation (Continued)
stock-based compensation plans. The activity under the Cendant Plan that related to our employees is described below.
Stock Options
Stock options granted by Cendant to its employees generally expired ten years from the grant date. In 2004, Cendant adopted performance and time vesting
criteria for stock option grants. The predetermined performance criteria determined the number of options that would ultimately vest and were based on the
growth of Cendant's earnings and cash flows over the vesting period of the respective award. The number of options that vested ranged from 0% to 200% of the
base award. Vesting occurred over a four-year period, but did not exceed 25% of the base award in each of the three years following the grant date. All unvested
stock options vested 30 days subsequent to the separation of certain subsidiaries of Cendant. Cendant's policy was to grant stock options with exercise prices at
the then-current fair market value.
The table below summarizes our stock option activity under the Cendant Plan during the period from January 1, 2006 to August 22, 2006 and the year ended
December 31, 2005:
Predecessor
Period January 1, 2006 to August 22, 2006
Year Ended December 31, 2005
Number of Options
Weighted Average
Exercise Price
(per share)
Number of Options
Weighted Average
Exercise Price
(per share)
Outstanding at beginning of year or period 3,098,203 $ 14.42 3,589,501 $ 14.31
Granted(a) — — 103,446 20.03
Exercised (1,041) 17.15 (343,774) 13.55
Forfeited/cancelled (211,939) 14.35 (250,970) 16.38
Vested/converted as a result of the Blackstone Acquisition (2,885,223) 14.41 — —
Outstanding at end of year or period — — 3,098,203 $ 14.42
(a)
In 2005, the stated value reflects the maximum number of stock options assuming achievement of all performance and time vesting criteria.
The fair value of stock options granted during the year ended December 31, 2005 was estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions:
Assumptions:
Dividend yield 1.7%
Expected volatility 30.0%
Expected life (in years) 5.5
Risk-free interest rate 3.8%
104
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008