Cincinnati Bell 2012 Annual Report Download - page 186

The fair values at the date of grant were estimated using the Black-Scholes pricing model with the following
assumptions:
2012 2011 2010
Expected volatility ......................................................... 43.5% — 43.7%
Risk-free interest rate ....................................................... 0.8% — 2.2%
Expected holding period (in years) ............................................ 5 — 5
Expected dividends ........................................................ 0.0% — 0.0%
Weighted-average grant date fair value ......................................... $1.32 $ — $1.16
The Company did not grant any stock options or stock-settled appreciation rights in the year ended
December 31, 2011. The expected volatility assumption used in the Black-Scholes pricing model was based on
historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of
grant. The expected holding period was estimated using the historical exercise behavior of employees and
adjusted for abnormal activity. Expected dividends are based on the Company’s history of not paying dividends.
Performance-Based Restricted Awards
Awards granted generally vest over three years and upon the achievement of certain performance-based
objectives. Performance-based awards are expensed based on their grant date fair value if it is probable that the
performance conditions will be achieved.
The following table summarizes our outstanding performance-based restricted award activity:
2012 2011 2010
(in thousands, except per share amounts) Shares
Weighted-
Average
Exercise
Price Per
Share Shares
Weighted-
Average
Exercise
Price Per
Share Shares
Weighted-
Average
Exercise
Price Per
Share
Non-vested at January 1, .................... 1,839 $2.90 2,641 $3.25 4,218 $3.39
Granted* ................................ 808 3.40 998 2.85 736 2.92
Vested .................................. (552) 2.85 (479) 2.84 (1,146) 3.59
Forfeited ................................ (408) 2.79 (1,321) 3.91 (1,167) 3.20
Non-vested at December 31, ................. 1,687 $3.13 1,839 $2.90 2,641 $3.25
(dollars in millions)
Compensation expense for the year ........... $ 2.7 $ 2.4 $ 0.5
Tax benefit related to compensation expense .... $ (1.0) $ (0.9) $ (0.2)
Grant date fair value of awards vested ......... $ 1.6 $ 1.4 $ 4.1
* Assumes the maximum number of awards that can be earned if the performance conditions are achieved.
As of December 31, 2012, unrecognized compensation expense related to performance-based awards was
$2.0 million, which is expected to be recognized over a weighted-average period of approximately one year.
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Form 10-K Part II Cincinnati Bell Inc.