Time Magazine 2012 Annual Report Download - page 106

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
among the S&P 500 Index companies over the performance period. Certain equity awards provide for accelerated
vesting upon an election to retire after reaching a specified age and years of service, as well as in certain
additional circumstances for non-employee directors.
Holders of RSUs are generally entitled to receive cash dividend equivalents based on the regular quarterly
cash dividends declared and paid by the Company during the period that the RSUs are outstanding. Beginning
with RSU grants made in 2013, the dividend equivalent payment for holders of RSUs subject to a performance
condition will be made in cash following the satisfaction of the performance condition. Holders of PSUs also are
entitled to receive dividend equivalents based on the regular quarterly cash dividends declared and paid by the
Company during the period that the PSUs are outstanding. The dividend equivalent payment will be made in cash
following the vesting of the PSUs (generally following the end of the applicable performance period) and will be
based on the number of shares that vest and are paid out. Holders of stock options do not receive dividends or
dividend equivalent payments.
Upon the (i) exercise of a stock option award, (ii) vesting of an RSU, (iii) vesting of a PSU or (iv) grant of
restricted stock, shares of Time Warner common stock may be issued either from authorized but unissued shares
or from treasury stock. Upon the exercise of Time Warner stock options held by Time Warner Cable Inc.
(“TWC”) employees, TWC is obligated to reimburse Time Warner for the intrinsic value of the applicable award.
This asset is carried at fair value and is $13 million as of December 31, 2012. Changes in the fair value of this
asset are recorded in Other loss, net, in the Consolidated Statement of Operations.
Other information pertaining to each category of equity-based compensation appears below.
Stock Options
The table below summarizes the weighted-average assumptions used to value stock options at their grant
date and the weighted-average grant date fair value per share:
Year Ended December 31,
2012 2011 2010
Expected volatility ................................... 31.2% 29.5% 29.5%
Expected term to exercise from grant date ................. 6.50 years 6.31 years 6.51 years
Risk-free rate ....................................... 1.3% 2.8% 2.9%
Expected dividend yield ............................... 2.8% 2.6% 3.1%
Weighted average grant date fair value per share ........... 8.69 9.01 6.39
The following table summarizes information about stock options outstanding as of December 31, 2012:
Number
of Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
(thousands) (in years) (thousands)
Outstanding as of December 31, 2011 .......... 101,114 $34.80
Granted .................................. 4,736 37.47
Exercised ................................ (35,171) 31.81
Forfeited or expired ........................ (14,676) 51.72
Outstanding as of December 31, 2012 .......... 56,003 32.46 4.93 $ 860,525
Exercisable as of December 31, 2012 .......... 38,982 33.02 3.65 $ 577,424
As of December 31, 2012, the number, weighted-average exercise price, aggregate intrinsic value and
weighted-average remaining contractual term of Time Warner stock options vested and expected to vest
approximate amounts for options outstanding. As of December 31, 2012, 47 million shares of Time Warner
common stock were available for future grants of stock options under the Company’s equity plan.
90