American Home Shield 2010 Annual Report Download - page 102

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 18. Stock-Based Compensation (Continued)
No. 107 and 110. The risk-free interest rates were based on the U.S. Treasury securities with terms similar to the expected lives of the options as of the grant
dates.
Year Ended Dec. 31,
Assumption 2010 2009 2008
Expected volatility 31.7% - 34.3% 38.5% - 46.9% 25.1% - 46.9%
Expected dividend yield 0.0% 0.0% 0.0%
Expected life (in years) 6.3 6.3 6.3
Risk-free interest rate 1.77% - 2.63% 2.56% - 2.92% 2.56% - 3.56%
The weighted-average grant-date fair value of the options granted during 2010, 2009 and 2008 was $3.65, $4.36 and $4.19 per option, respectively. The
Company has applied a forfeiture assumption of 5.78% per annum in the recognition of the expense related to these options.
A summary of option activity under the MSIP as of December 31, 2010, 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, 2009 10,014,133 $ 10.00
Granted to employees 284,400 $ 10.00
Exercised —
Forfeited (696,850) $ 10.00
Total outstanding, December 31, 2010 9,601,683 $ 10.00 7.3
Total exercisable, December 31, 2010 6,346,898 $ 10.00 7.0
On September 24, 2010, the compensation committee of the Holdings board of directors approved an employee restricted stock unit agreement to be used
when awards of RSUs are made under the MSIP and granted 735,000 RSU awards to certain senior executives of ServiceMaster. The RSUs had a grant-date
fair value of $10.00 per unit, which was equivalent to the then current fair value of Holdings' common stock, and will vest in three equal annual installments,
subject to an employee's continued employment. Upon vesting, each RSU will be converted into one share of Holdings' common stock.
A summary of RSU activity under the MSIP as of December 31, 2010, and changes during the year then ended is presented below:
RSUs
Weighted Avg.
Grant Date
Fair Value
Total outstanding, December 31, 2009 —
Granted to employees 735,000 $ 10.00
Vested —
Forfeited —
Total outstanding, December 31, 2010 735,000 $ 10.00
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