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108 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted average estimated fair value at the date of grant
for options granted from January 1, 2007, to May 28, 2007, was
$13.62 per share (2006 – $8.89).
Unrecognized stock-based compensation expense at December
31, 2007 related to stock-option plans was $20 million, and will be
recorded in the consolidated statements of income over the next
four years.
(B) RESTRICTED SHARE UNIT PLAN:
The restricted share unit plan enables employees, officers and directors
of the Company to participate in the growth and development of
the Company. Under the terms of the plan, restricted share units are
issued to the participant and the units issued vest over a period not
to exceed three years from the grant date.
On the vesting date, the Company, at its option, shall redeem all
of the participants’ restricted share units in cash or by issuing one
Class B Non-Voting share for each restricted share unit. The
Company has reserved 4,000,000 Class B Non-Voting shares for
issuance under this plan.
During the year ended December 31, 2007, the Company granted
266,720 restricted share units (2006 – 506,964). At December 31, 2007,
1,167,564 (2006 – 1,037,668) restricted share units were outstanding.
These restricted share units vest at the end of three years from
the grant date. Stock-based compensation expense for the year
ended December 31, 2007, related to these restricted share units
was $21 million (2006 – $12 million). Unrecognized stock-based
compensation expense as at December 31, 2007, related to these
restricted share units was $19 million (2006 – $20 million), and will
be recorded in the consolidated statements of income over the
next three years.
(C) DEFERRED SHARE UNIT PLAN:
The deferred share unit plan enables directors and certain key
executives of the Company to elect to receive certain types of
(iii) Performance options:
During the year ended December 31, 2007, the Company granted
1,036,200 (2006 – 1,398,800) performance-based options to certain
key executives. These options are governed by the terms of the
2000 Plan. These options vest on a straight-line basis over four years
provided that certain targeted stock prices are met on or after the
anniversary date.
As a result of the May 28, 2007, SAR amendment, all outstanding
options, including the performance options, are classified as liabilities
and are carried at their intrinsic value as adjusted for vesting.
(iv) Assumptions:
The fair values of options granted or amended prior to May 28, 2007,
and during 2006 were based on the following assumptions:
remuneration in deferred share units, which are classified as a
liability on the consolidated balance sheets (2007 – $24 million;
2006 – $9 million). During the year ended December 31, 2007, the
Company granted 281,079 deferred share units (2006 – 73,353). At
December 31, 2007, 544,370 (2006 – 263,291) deferred share units
were outstanding. Stock-based compensation expense for the
year ended December 31, 2007 related to these deferred share
units was $7 million (2006 – $5 million). There is no unrecognized
compensation related to deferred share units, since these awards
vest immediately when granted.
(D) EMPLOYEE SHARE ACCUMULATION PLAN:
The employee share accumulation plan allows employees to
voluntarily participate in a share purchase plan. Under the terms
of the plan, employees of the Company can contribute a specified
percentage of their regular earnings through payroll deductions.
The designated administrator of the plan then purchases, on a
monthly basis, Class B Non-Voting shares of the Company on the
open market on behalf of the employee. At the end of each month,
the Company makes a contribution of 25% to 50% of the employee’s
contribution in the month, which is recorded as compensation
expense. The administrator then uses this amount to purchase
additional shares of the Company on behalf of the employee, as
outlined above.
Compensation expense related to the employee share accumulation
plan amounted to $9 million for the year ended December 31, 2007
(2006 – $4 million).
Prior to May 28, 2007 2006
Risk-free interest rate 3.92% – 4.00% 3.94% – 4.47%
Dividend yield 0.42% – 0.43% 0.27% – 0.48%
Volatility factor of the future expected market prices of Class B Non-Voting shares 34.47% – 36.55% 35.46% – 42.30%
Weighted average expected life of the options 4.7 – 6.0 years 4.8 – 5.6 years