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70 COGECO CABLE INC. 2012 Consolidated financial statements
Under the Stock Option Plan, the following options were granted by the Corporation and are outstanding at August 31:
2012 2011
Number o
f
options
Weighted
average
exercise price
Number o
f
options
Weighted
average
exercise price
$ $
Outstanding, beginning of the year 564,377 32.30 716,760 30.16
Granted 91,961 48.03 71,090 39.26
Exercised(1) (43,852) 29.52 (188,319) 25.17
Forfeited (2,800) 48.02 (34,706) 41.12
Expired (448) 36.10
Outstanding, end of the year 609,686 34.80 564,377 32.30
Exercisable, end of the year 410,443 31.64 393,802 30.39
(1) The weighted average share price for options exercised during the period was $49.48 ($42.55 in 2011).
At August 31, 2012, 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 1.18 16.38 20,222 16.38
21.50 to 26.63 183,624 3.76 25.70 183,624 25.70
28.95 to 34.46 180,620 5.85 32.22 124,130 32.04
36.10 to 45.59 69,333 8.06 39.50 15,741 40.27
48.02 to 49.82 155,887 7.45 48.80 66,726 49.82
609,686 5.73 34.80 410,443 31.64
The weighted average fair value of stock options granted for the year ended August 31, 2012 was $11.30 ($10.68 in 2011) per option. The
weighted average fair value of each option granted was estimated at the grant date for purposes of determining share-based
compensation expense using the Black-Scholes option pricing model based on the following assumptions:
2012 2011
% %
Expected dividend yield 1.66 1.44
Expected volatility(1) 26.85 28.71
Risk-free interest rate 1.74 2.29
Expected life (in years) 6.1 6.2
(1) The expected volatility is based on the historical volatility of the Corporation’s subordinate voting shares for a period equivalent to the expected life of the
options.
ISU plan
The Corporation also offers a senior executives and designated employees ISU Plan. Effective October 29, 2009, senior executives and
designated employees periodically receive a given number of Incentive Share Units (“ISUs”) which entitle the participants to receive
subordinate voting shares of the Corporation after three years less one day from the date of grant. For the year ended August 31, 2012,
the Corporation granted 60,479 (61,724 in 2011) ISUs of which 11,006 (10,000 in 2011) ISUs were granted to COGECO Inc.’s employees.
The Corporation establishes the value of the compensation related to the ISUs granted based on the fair value of the Corporation’s
subordinate voting shares at the date of grant and a compensation expense is recognized over the vesting period, which is three years
less one day. A Trust was created for the purpose of purchasing these shares on the stock market in order to protect against stock price
fluctuation. The Corporation instructed the trustee to purchase 61,815 (59,503 in 2011) subordinate voting shares of the Corporation on