American Home Shield 2009 Annual Report Download - page 122

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 20. Stock-Based Compensation (Continued)
A summary of option activity under the MSIP as of December 31, 2009, and changes during the year then ended is presented below:
Stock
Options
Weighted Avg.
Exercise Price
Remaining
Contractual
Term (in years)
Total outstanding, December 31, 2008 9,585,501 $ 10.00
Granted to employees 906,000 $ 10.00
Exercised 0
Forfeited (477,368) $ 10.00
Total outstanding, December 31, 2009 10,014,133 $ 10.00 8.2
Total exercisable, December 31, 2009 4,341,843 $ 10.00 8.0
During the years ended December 31, 2009 and 2008 and the Successor period from July 25, 2007 to December 31, 2007, the Company recognized
stock-based compensation cost of $8.1 million ($5.0 million, net of tax), $7.0 million ($5.3 million, net of tax) and $0.3 million ($0.2 million, net of tax),
respectively. As of December 31, 2009, there was $19.1 million of total unrecognized compensation cost related to non-vested stock options granted by
Holdings under the MSIP. These remaining costs are expected to be recognized over a weighted-average period of 2.3 years.
Predecessor
The Company maintained a shareholder approved incentive plan that allowed for the issuance of equity-based compensation awards, including stock
options, stock appreciation rights, share grants, restricted stock awards and restricted stock unit awards ("Share Plan"). The Share Plan was terminated upon
the consummation of the Merger.
The Company's stock options and stock appreciation rights are collectively referred to as "options". During the Predecessor period from January 1, 2007
to July 24, 2007 the Company recognized pre-tax option expense of $1.7 million, and the Company recognized related tax benefits of $0.7 million.
During the Predecessor period from January 1, 2007 to July 24, 2007, the Company recognized total pre-tax share grant and restricted stock
compensation expense of $1.7 million, and the Company recognized related tax benefits of $0.7 million.
The Company did not issue stock options, stock appreciation rights, share grants, restricted stock awards or restricted stock unit awards during the
Predecessor period from January 1, 2007 to July 24, 2007. Due to provisions in the Share Plan that allowed for the cash settlement of equity awards upon a
change in control of the Company, the Company recorded a charge of $45.7 million pre-tax for the reclassification of the awards from equity awards to
liability awards. Additionally, the Merger resulted in the accelerated vesting of previously unvested equity awards, for which the Company recorded a charge
of $12.4 million pre-tax. These charges were not included in the statements of operations of the Predecessor or Successor; rather they were reflected as a cost
of the Merger.
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