Virgin Media 2008 Annual Report Download - page 132

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11—Stock-Based Compensation Plans (Continued)
options was estimated at the date of grant using a Black-Scholes option-pricing model with the
following weighted-average assumptions for the years ended December 31, 2008, 2007 and 2006:
Year ended December 31,
2008 2007 2006
Risk-free Interest Rate .................... 2.43% 4.52% 4.79%
Expected Dividend Yield .................. 1.00% 0.94% 0.00%
Expected Volatility ....................... 33.65% 29.04% 25.06%
Expected Lives .......................... 4.7 Years 4.6 Years 2.4 Years
The above weighted average assumptions for the year ended December 31, 2006 include options
converted on the merger with Telewest. Had these been excluded, the assumptions would have been as
follows: risk free interest rate 4.83%, expected dividend yield 0.00%, expected volatility 26.24% and
expected lives 4.3 years.
A summary of the status of our stock option grants outstanding as of December 31, 2008, and of
the changes during the year ended December 31, 2008, is given below.
Weighted
Average
Exercise
Options Price
Outstanding—beginning of year ....................... 10,804,977 $22.40
Granted ........................................ 8,817,681 11.85
Exercised ....................................... (12,503) 4.66
Forfeited or Expired ............................... (2,204,796) 21.94
Outstanding—end of year ........................... 17,405,359 17.15
Exercisable at end of the year ........................ 5,168,662 $19.83
The weighted-average grant-date fair value of options granted during the years ended
December 31, 2008, 2007 and 2006, excluding options converted on the merger with Telewest, was
$3.86, $7.08 and $7.76, respectively. The weighted-average grant-date fair value of options granted
during the year ended December 31, 2006 including options converted on the merger was $11.46. The
total intrinsic value of options exercised during the years ended December 31, 2008, 2007 and 2006, was
£0.1 million, £23.4 million, and £47.1 million, respectively.
The aggregate intrinsic value of options outstanding as at December 31, 2008 was £0.4 million with
a weighted average remaining contractual term of 7.5 years. The aggregate intrinsic value of options
exercisable as at December 31, 2008 was £0.2 million with a weighted average remaining contractual
term of 6.5 years.
Non-vested Shares
As a result of the reverse acquisition of Telewest, each share of our common stock issued and
outstanding immediately prior to the effective date of the acquisition was converted into the right to
receive 2.5 shares of the new parent company.
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