eTrade 2008 Annual Report Download - page 145

A summary of options activity under the 2005 Plan is presented below:
Shares
(in thousands)
Weighted-
Average
Exercise Price
Weighted-Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2007 32,756 $14.02 4.43 $ 18
Granted 10,657 $ 4.56
Exercised (88) $ 3.72
Canceled (14,699) $11.57
Outstanding at December 31, 2008 28,626 $11.52 4.75 $—
Vested and expected to vest at December 31, 2008 27,172 $11.54 4.69 $—
Exercisable at December 31, 2008 17,698 $12.40 3.99 $—
As of December 31, 2008, there was $28.8 million of total unrecognized compensation cost related to
non-vested stock options. This cost is expected to be recognized over a weighted-average period of 1.5 years.
Restricted Stock Awards and Restricted Stock Units
The Company issues restricted stock awards and restricted stock units to its employees. Each restricted
stock unit can be converted into one share of the Company’s common stock upon vesting. These awards are
issued at the fair market value on the date of grant and vest ratably over the period, generally two to four years.
The fair value is calculated as the market price upon issuance.
In connection with the Company’s contract to hire the Chief Executive Officer (“CEO”), the Board made
grants of restricted stock and stock options. The grants vest through October 2009, 62.5% of which time vests
through January 1, 2009 and the balance of which time-vest through October 2009. In making these awards, the
Board exercised its discretion to amend the 2005 Stock Incentive Plan and issue grants in excess of the stated
maximum to any individual in any single year but did not increase the aggregate number of shares that may be
issued under the 2005 Stock Incentive Plan; however, the Board will not issue any further equity, cash bonus or
non-equity incentive plan payments to the CEO through at least the end of 2009. None of the restricted stock
awards and no more than 37.5% of the stock option awards are expected to be deductible for federal income tax
purposes.
The Company recorded $15.5 million, $9.4 million and $10.5 million for the years ended December 31,
2008, 2007 and 2006, respectively, in compensation expense from continuing operations related to restricted
stock awards and restricted stock units. The Company recognized a tax benefit of $3.9 million, $3.2 million and
$3.7 million related to restricted stock awards and restricted stock units for the years ended December 31, 2008,
2007 and 2006, respectively.
A summary of non-vested restricted stock award activity is presented below:
Shares (in
thousands)
Weighted-
Average
Grant
Date Fair
Value
Non-vested at December 31, 2007 1,884 $15.54
Issued 605 $ 3.31
Released (vested) (1,049) $10.89
Canceled (455) $18.86
Non-vested at December 31, 2008 985 $ 9.27
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