Activision 2012 Annual Report Download - page 81

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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, multiplied by the number of 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 exercised was $25 million, $47 million and
$104 million for the years ended December 31, 2012, 2011 and 2010, respectively. Total grant date fair value of options vested was $47 million,
$57 million and $114 million for the years ended December 31, 2012, 2011 and 2010, respectively.
At December 31, 2012, $22 million of total unrecognized compensation cost related to stock options is expected to be recognized over
a weighted-average period of 1.4 years.
Income tax benefit from stock option exercises was $20 million, $28 million and $36 million for the years ended December 31, 2012,
2011 and 2010, respectively.
Restricted Stock Units and Restricted Stock Awards Activities
We grant restricted stock units, which represent the right to receive shares of our common stock, and restricted stock awards, which
are issued and outstanding upon grant but subject to the risk of forfeiture (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. 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. Holders of restricted stock 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.
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 vested 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 did not achieve the market performance measure for a vesting period, no performance shares would vest for
that vesting period. If, however, the Company achieved the market performance measure for a subsequent vesting period, then all of the
performance shares that would have vested on the previous vesting date would vest on the vesting date when the market performance measure
was achieved. As of December 31, 2012, the market performance measure was not achieved and all of the market performance-based restricted
shares granted to Mr. Kotick were forfeited.
The following table summarizes our restricted stock rights activity for the year ended December 31, 2012 (amounts in thousands
except per share amounts):
Restricted
Stock Rights
Weighted-Average
Grant Date Fair
Value
Unvested restricted stock rights balance at December 31, 2011 ......................
17,139
$12.28
Granted ..............................................................................................................
15,498
11.81
Vested ................................................................................................................
(3,554)
12.32
Forfeited ............................................................................................................
(3,478)
14.16
Unvested restricted stock rights balance at December 31, 2012 ......................
25,605
12.29
At December 31, 2012, approximately $112 million of total unrecognized compensation cost was related to restricted stock rights,
which is expected to be recognized over a weighted-average period of 1.73 years. Of the total unrecognized compensation cost, $37 million was
related to performance- vesting restricted stock rights, which is expected to be recognized over a weighted-average period of 1.71 years. Total
grant date fair value of vested restricted stock rights was $45 million, $37 million and $40 million for the years ended December 31, 2012, 2011
and 2010, respectively.
Stock-Based Compensation Expense
The following table sets forth the total stock-based compensation expense included in our consolidated statements of operations for
the years ended December 31, 2012, 2011, and 2010 (amounts in millions):