Activision 2010 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2010 Activision 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 94

  • 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

66
Stock Option Activities
Stock option activities for the year ended December 31, 2010 are as follows (amounts in millions, except number of
shares, which are in thousands, and per share amounts):
Shares
Weighted-average
exercise price
Weighted-average
remaining
contractual term
Aggregate
intrinsic value
Outstanding at December 31, 2009 ....................................... 71,818 $9.04
Granted ................................................................................. 11,276 11.52
Exercised .............................................................................. (16,211) 4.99
Forfeited/Expired .................................................................. (5,708) 10.19
Outstanding at December 31, 2010 ....................................... 61,175 10.46 6.96 $157
Vested and expected to vest at
December 31, 2010 ........................................................... 58,478 $10.38 6.30 $155
Exercisable at December 31, 2010 ........................................ 36,650 $9.29 5.88 $136
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference
between our closing stock price on the last trading day of the period and the exercise price, times the number of shares
underlying options where the exercise price is below the closing stock price) that would have been received by the option
holders had all option holders exercised their options on that date. This amount changes as it is based on the fair market value
of our stock. Total intrinsic value of options actually exercised was $104 million, $312 million, and $53 million for the years
ended December 31, 2010, 2009, and 2008, respectively. Total grant date fair value of options vested was $114 million,
$143 million, and $32 million for the years ended December 31, 2010, 2009, and 2008, respectively.
At December 31, 2010, $57 million of total unrecognized compensation cost related to stock options is expected to
be recognized over a weighted-average period of 1.6 years.
Income tax benefit from stock option exercises was $36 million, $85 million, and $22 million for the years ended
December 31, 2010, 2009, and 2008, respectively.
Non-Plan Employee Stock Options Granted to Executives
In connection with prior employment agreements between Activision, Inc. and Robert A. Kotick, our Chief
Executive Officer, and Brian G. Kelly, our Co-Chairman, Mr. Kotick and Mr. Kelly were previously granted options to
purchase common stock of Activision, Inc. which were not awarded under a stockholder- or board-approved plan. These
awards were assumed as a result of the Business Combination and accounted for as an exchange for options to purchase our
common stock. All non-plan options were exercised during 2009.
Restricted Stock Units and Restricted Stock Awards Activities
We grant restricted stock units and restricted stock awards (collectively referred to as “restricted stock rights”) under
the 2008 Plan to employees around the world, and we have assumed as a result of the Business Combination the restricted
stock rights granted by Activision, Inc. Restricted stock rights entitle the holders thereof to receive shares of our common
stock at the end of a specified period of time or otherwise upon a specified occurrence (which may include the satisfaction of
a performance measure). Restricted stock awards are issued and outstanding upon grant. Holders of restricted stock rights are
restricted from selling the shares until they vest. Upon vesting of restricted stock rights, we may withhold shares otherwise
deliverable to satisfy tax withholding requirements. Restricted stock rights are subject to forfeiture and transfer restrictions.
Vesting for restricted stock rights is contingent upon the holders’ continued employment with us and may be subject to other
conditions (which may include the satisfaction of a performance measure). If the vesting conditions are not met, unvested
restricted stock rights will be forfeited.
In connection with the consummation of the Business Combination, on July 9, 2008, Robert A. Kotick, our Chief
Executive Officer, received a grant of 2,500,000 market performance-based restricted shares, which vest in 20% increments
on each of the first, second, third, and fourth anniversaries of the date of grant, with another 20% vesting on December 31,
2012, the expiration date of Mr. Kotick’s employment agreement with the Company, in each case subject to the Company
attaining the specified compound annual total shareholder return target for that vesting period. If the Company does not
achieve the market performance measure for a vesting period, no performance shares will vest for that vesting period. If,