Priceline 2011 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2011 Priceline 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 111

  • 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

78
The following table summarizes the activity of unvested restricted stock units ("RSUs"), performance share units and
restricted stock during the years ended December 31, 2009, 2010 and 2011:
Share-Based Awards
Unvested at December 31, 2008
Granted
Vested
Performance Shares Adjustment
Forfeited
Unvested at December 31, 2009
Granted
Vested
Performance Shares Adjustment
Forfeited
Unvested at December 31, 2010
Granted
Vested
Performance Shares Adjustment
Forfeited
Unvested at December 31, 2011
Shares
1,802,150
353,932
(578,730)
(56,254)
(32,244)
1,488,854
179,101
(367,856)
260,822
(30,274)
1,530,647
125,564
(858,019)
73,710
(71,922)
799,980
Weighted Average
Grant
Date Fair Value
$ 74.33
$ 79.63
$ 29.16
$ 119.65
$ 102.65
$ 90.82
$ 236.66
$ 57.24
$ 182.16
$ 120.80
$ 130.93
$ 469.29
$ 113.37
$ 496.34
$ 182.90
$ 231.87
The Company granted 125,564, 179,101 and 306,746 restricted shares, performance share units and restricted stock
units during the years ended December 31, 2011, 2010 and 2009, respectively, with an aggregate grant-date fair value of
approximately $58.9 million, $42.4 million and $25.8 million, respectively. During the years ended December 31, 2011, 2010
and 2009, respectively, 858,019, 367,856 and 578,730 shares of share-based awards vested with total grant date fair values of
$97.3 million, $21.1 million and $16.9 million, respectively.
Additionally, in March 2009, the Company granted an aggregate of 47,186 restricted stock units to certain executives.
The restricted stock units will be forfeited if the Company’s common stock does not achieve and maintain certain stock price
thresholds during the six month period preceding the March 2012 vesting date. If during such six month period the Company’s
common stock closes at or above the stock price of $97.05, $104.69, or $113.03 for twenty (20) consecutive trading days, 50%,
75% or 100%, respectively, of the RSUs will be earned pursuant to the market price requirement. Subject to certain exceptions
related to a change in control and terminations other than for "cause," or on account of death or disability, the executives must
also continue their service through March 3, 2012 in order to receive any shares of the Company’s common stock. The RSUs
earned, if any, are payable in the Company’s common stock upon vesting. Stock-based compensation expense related to an
award with a market condition is recognized over the requisite service period regardless of whether the market condition is
satisfied, provided that the requisite service period has been completed. The value of the Company’s stock on the date of grant
was $82.65 per share. The Company considered the "path dependent" nature of the RSUs and determined the grant date fair
value by replicating the payout structure of the RSUs using a series of call options and cash-or-nothing binary call options.
Cash-or-nothing binary call options provide the holder with the right to receive the strike price if the stock price exceeds the
strike price as of the expiration date. The fair value calculation included the following assumptions: a 1.36% annualized risk-
free interest rate, a calculated three year historical volatility of 55.95%, no dividends, and an expected term equal to the three
year vesting period. The award had a total grant date fair value of $2.4 million based on a grant date fair value of $51.11 per
share. The fair value of a grant subject to a market condition is generally lower than an award with only a service condition for
vesting since the market condition may never be met.
As of December 31, 2011, there is $92.1 million of total future compensation cost related to unvested share-based
awards to be recognized over a weighted-average period of 1.9 years.