Albertsons 2009 Annual Report Download - page 66

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Shares
Under Option
(In thousands)
Weighted
Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(In years)
Aggregate
Intrinsic Value
(In thousands)
Outstanding, February 23, 2008 19,997 $35.72
Granted 3,606 34.83
Exercised (485) 23.92
Canceled and forfeited (1,145) 39.47
Outstanding, February 28, 2009 21,973 $35.64 3.79 $242
Vested and expected to vest in future as of
February 28, 2009 21,669 $35.61 3.76 $242
Exercisable as of February 28, 2009 15,742 $34.98 3.16 $242
The weighted average grant date fair value of all stock options granted during fiscal 2009, 2008 and 2007 was
$7.91, $8.97 and $6.18 per share, respectively. In fiscal 2007, the weighted average grant date fair value of
stock options granted to holders of Albertsons stock options who became employees of the Company after the
Acquisition was $6.07 per share. The weighted average grant date fair value of all other stock options granted
during fiscal 2007 was $6.96 per share. The total intrinsic value of stock options exercised during fiscal 2009,
2008, and 2007 was $4, $93 and $71, respectively. Intrinsic value is measured using the fair market value as
of the date of exercise for stock options exercised and the fair market value as of February 28, 2009, less the
applicable exercise price.
The fair value of each stock option is estimated as of the date of grant using the Black-Scholes option pricing
model. Expected volatility is estimated based on an average of actual historical volatility and implied volatility
corresponding to the stock option’s estimated expected term. The Company believes this approach to determine
volatility is representative of future stock volatility. The expected term of a stock option is estimated based on
analysis of stock options already exercised and foreseeable trends or changes in behavior. The risk-free interest
rates are based on the U.S. Treasury securities maturities as of each applicable grant date. The dividend yield
is based on analysis of actual historical dividend yield.
The significant weighted average assumptions relating to the valuation of the Company’s stock options
consisted of the following:
2009 2008 2007
Dividend yield 2.0% 2.0% 2.0%
Volatility rate 28.1–59.4% 19.1–30.8% 20.6–29.5%
Risk-free interest rate 1.0–3.6% 3.0–5.1% 4.5–5.2%
Expected option life 1.0–5.4 years 1.0–5.5 years 1.0–5.4 years
Restricted Stock Awards
Restricted stock award activity consisted of the following:
Restricted
Stock
(In thousands)
Weighted Average
Grant-Date
Fair Value
Outstanding, February 23, 2008 919 $28.97
Granted 802 31.63
Lapsed (300) 30.44
Canceled and forfeited (41) 35.35
Outstanding, February 28, 2009 1,380 $30.05
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