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70 COGECO CABLE INC. 2011 Consolidated financial statements
Under the Stock Option Plan, the following options were granted by the Corporation and are outstanding at August 31:
2011 2010
Options
Weighted
average
exercise price Options
Weighted
average
exercise price
$ $
Outstanding, beginning of year 716,760 30.16 716,745 30.37
Granted 71,090 39.26 66,174 32.08
Exercised (188,319) 25.17 (17,911) 26.88
Forfeited (34,706) 41.12 (37,850) 39.95
Cancelled(1) – – (10,398) 26.63
Expired (448) 36.10 – –
Outstanding, end of year 564,377 32.30 716,760 30.16
Exercisable, end of year 393,802 30.39 507,811 28.28
(1) In fiscal year 2010, the Corporation cancelled 10,398 conditional stock options as yearly financial objectives by the Portuguese subsidiary, Cabovisão, were
not achieved.
At August 31, 2011, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life of
options are as follows:
Options outstanding Options exercisable
Range of exercise prices
Numbe
r
outstanding
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise price
Numbe
r
exercisable
Weighted
average
exercise price
$ $ $
15.70 to 16.80 20,222 2.18 16.38 20,222 16.38
21.50 to 26.63 199,860 4.71 25.59 199,860 25.59
28.95 to 34.46 207,996 6.80 32.26 117,868 31.83
36.10 to 45.59 69,573 9.07 39.50 2,209 45.25
49.82 66,726 6.15 49.82 53,643 49.82
564,377 6.10 32.30 393,802 30.39
The Corporation recorded compensation expense for options granted on or after September 1, 2003. As a result, a compensation expense of
$361,000 ($619,000 in 2010) was recorded for the year ended August 31, 2011.
The weighted average fair value of each option granted was estimated on the grant date for purposes of determining stock-based
compensation expense using the binomial option pricing model based on the following assumptions:
2011 2010
% %
Expected dividend yield 1.44 1.49
Expected volatility 29 29
Risk-free interest rate 2.05 2.67
Expected life in years 4.9 4.8
The fair value of stock options granted for the year ended August 31, 2011 was $9.58 ($8.12 in 2010) per option.
For the purpose of compensation expense, stock-based compensation costs are amortized to expense on a straight-line basis over the vesting
period, which is three to five years.