Adaptec 2010 Annual Report Download - page 68

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The Company received cash of $18.6 million from the exercise of stoc
k
-based awards during 2010 (2009
—
$28.3 million;
2008—$16.5 million). The total intrinsic value of stock awards exercised during 2010 was $16.1 million.
As of December 26, 2010, there was $25.7 million of total unrecognized compensation cost related to nonvested stock options
granted under the Company’s stock option plans, which is expected to be recognized over a period of 2.7 years. As of December 26,
2010, there was $11.8 million of total unrecognized compensation cost related to nonvested Restricted Stock Units (“RSUs”) awarded
under the Company’s stock option plans, which is expected to be recognized over a period of 2.6 years.
The fair value of the Company’s stock option awards granted to employees during 2008 was estimated using a lattice-binomial
valuation model. The Company believes that the lattice-binomial model provides a better estimate of the fair value of stock option
awards because it considers the contractual term of the option, the probability that the option will be exercised prior to the end of its
contractual life, and the probability of termination or retirement of the option holder in computing the value of the option. Both
models require the input of highly subjective assumptions including the expected stock price volatility and expected life.
The Company’s estimates of expected volatilities are based on a weighted historical and market-based implied volatility. The
Company uses historical data to estimate option exercises and employee terminations within the valuation model. Separate groups of
employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of
options granted is derived from the output of the stock option valuation model and represents the period of time that granted options
are expected to be outstanding. The risk-free rate for periods within the contractual life of the stock option is based on the U.S.
Treasury yield curve in effect at the time of the grant.
The fair values of the Company’s stock option and Employee Stock Purchase Plan, (“ESPP”) awards were estimated using the
following weighted average assumptions:
Stock Options:
Employee Share Purchase Plan:
Stock Option Plans
The Company issues its common stock under the provisions of the 2008 Equity Plan (the “2008 Plan”). Stock option awards are
granted with an exercise price equal to the closing market price of the Company’s common stock at the grant date. The options
generally expire within 10 years and vest over four years.
The 2008 Plan was approved by stockholders at the 2008 Annual Meeting. The 2008 Plan became effective on January 1, 2009
(the “Effective Date”). It is a successor to the 1994 Incentive Stock Plan (the “1994 Plan”)
67
December 26,
2010
December 27,
2009
December 28,
2008
Ex
p
ected life (
y
ears)
4.4
4.4
4.5
Ex
p
ected volatilit
y
53%
66%
57%
Ris
k
-free interest rate
2.1%
1.8%
2.6%
December 26,
2010
December 27,
2009
December 28,
2008
Ex
p
ected life (
y
ears)
0.6
1.3
1.3
Ex
p
ected volatilit
y
44%
59%
49%
Ris
k
-free interest rate
0.2%
0.7%
2.1%