Orbitz 2009 Annual Report Download - page 100

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The exercise price of stock options granted under the Plan is equal to the fair market value of the
underlying stock on the date of grant. Stock options generally expire seven to ten years from the grant date.
The stock options granted at the time of the IPO as additional compensation to our employees who previously
held equity awards under the Travelport Plan, as described below, vested 5.555% in August 2007 and vest an
additional 8.586% on each subsequent November, February, May and August through February 2010, and
become fully vested in May 2010. All other stock options granted vest annually over a four-year period. The
fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service
period.
The fair value of stock options granted under the Plan is estimated on the date of grant using the Black-
Scholes option-pricing model. The weighted average assumptions for stock options granted during the year
ended December 31, 2008 and the period from July 18, 2007 to December 31, 2007 are outlined in the
following table. Expected volatility is based on implied volatilities for publicly traded options and historical
volatility for comparable companies over the estimated expected life of the stock options. The expected life
represents the period of time the stock options are expected to be outstanding and is based on the “simplified
method,” as defined in SEC Staff Accounting Bulletin No. 110, “Share-Based Payments.” The risk-free interest
rate is based on yields on U.S. Treasury strips with a maturity similar to the estimated expected life of the
stock options. We use historical turnover to estimate employee forfeitures.
Assumptions:
Year Ended
December 31,
2008
Period from
July 18, 2007 to
December 31,
2007
Dividend yield ......................................... — —
Expected volatility ...................................... 41% 38%
Expected life (in years) ................................... 4.76 6.16
Risk-free interest rate .................................... 3.62% 4.86%
Based on the above assumptions, the weighted average grant-date fair value of stock options granted
during the year ended December 31, 2008 and the period from July 18, 2007 to December 31, 2007 was $2.54
and $6.89, respectively.
Restricted Stock Units
The table below summarizes activity regarding unvested restricted stock units under the Plan for the year
ended December 31, 2008 and the period from July 18, 2007 to December 31, 2007:
Restricted
Stock Units
Weighted Average
Grant Date
Fair Value
(per share)
Unvested at July 18, 2007 ................................. — —
Granted .............................................. 2,687,836 $13.16
Vested (a) ............................................. (181,003) $11.73
Forfeited .............................................. (210,482) $13.08
Unvested at December 31, 2007............................. 2,296,351 $13.28
Granted .............................................. 1,492,703 $ 6.12
Vested (a) ............................................. (296,366) $11.61
Forfeited .............................................. (768,332) $12.26
Unvested at December 31, 2008............................. 2,724,356 $ 9.83
100
ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)