Computer Associates 2006 Annual Report Download - page 159

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Note 9 — Stock Plans (Continued)
values of the Company’s stock options granted in the fiscal years ended March 31, 2006, 2005, and 2004. Estimates
of fair value are not intended to predict actual future events or the value ultimately realized by employees who
receive equity awards.
The weighted average fair value at date of grant for options granted in fiscal years 2006, 2005, and 2004 was $15.06,
$15.44, and $14.60, respectively. The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model. The weighted average assumptions that were used for option grants in the
respective periods are as follows:
2006 2005 2004
Year Ended March 31,
Dividend yield ................................................. .57% .28% .30%
Expected volatility factor
(1)
....................................... .56 .65 .67
Risk-free interest rate
(2)
.......................................... 4.1% 3.6% 3.0%
Expected life (in years)
(3)
......................................... 6.0 4.5 4.5
(1) Measured using historical daily price changes of the Company’s stock over the respective term of the options and the implied volatility
derived from the market prices of the Company’s traded options.
(2) The risk-free rate for periods within the contractual term of the share options is based on the U.S. Treasury yield curve in effect at the time
of grant.
(3) The expected term is the number of years that the Company estimates, based primarily on historical experience, that options will be
outstanding prior to exercise. The increase in expected term in fiscal year 2006 as compared with fiscal year 2005 and 2004 was largely
related to a change in the demographics of the recipients of the stock options. In fiscal year 2005, stock options were granted to a broad base
of employees. In fiscal year 2006, stock options were primarily granted to executive management who historically hold options longer than
the broad base of employees.
The following table summarizes the activity of the RSU’s under the Plans:
Number
of Shares
Weighted Average
Grant Date
Fair Value
(shares in thousands)
Outstanding at March 31, 2003............................... 106 $52.88
Restricted units granted .................................. — —
Restricted units released .................................. — —
Restricted units cancelled ................................. — —
Outstanding at March 31, 2004............................... 106 $52.88
Restricted units granted .................................. 153 29.53
Restricted units released .................................. (53) 28.42
Restricted units cancelled ................................. — —
Outstanding at March 31, 2005............................... 206 $41.85
Restricted units granted .................................. 1,825 27.00
Restricted units released .................................. (11) 52.88
Restricted units cancelled ................................. (198) 27.00
Outstanding at March 31, 2006............................... 1,822 $28.53
139