E-Z-GO 2010 Annual Report Download - page 82

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date of the eligible stock option for which it was exchanged. The new options were treated as a modification under the accounting
guidance for equity-based compensation. Accordingly, since we discounted the fair value of the new options by 15% of the fair value
of the options exchanged, we did not incur any incremental expense associated with the modification.
The weighted-average assumptions used in our Black-Scholes option-pricing model for awards issued during the respective
periods are as follows:
2010
2009
2008
Dividend yield
0.4%
1.4%
1.7%
Expected volatility
37.0%
50.0%
30.0%
Risk-free interest rate
2.6%
2.0%
2.8%
Expected term (in years)
5.5
5.0
5.1
The following table summarizes information related to stock option activity for the respective periods:
(In millions) 2010 2009 2008
Intrinsic value of options exercised
$ 1
$ —
$ 28
Cash received from option exercises
8
—
40
Actual tax benefit realized for tax deductions from option exercises
—
—
10
Our income taxes payable for federal and state purposes has been reduced by the tax benefits we receive from employee stock options.
The income tax benefits we receive for certain stock options are calculated as the difference between the fair market value of the stock
issued at the time of exercise and the option price, tax effected. The tax impact of the tax deduction in excess of the related deferred
taxes is presented in the Consolidated Statements of Cash Flows as financing activities.
At January 1, 2011, our outstanding options had an aggregate intrinsic value of $24 million and a weighted-average remaining
contractual life of five years. Our exercisable options had an aggregate intrinsic value of $8 million and a weighted-average
remaining contractual life of four years at January 1, 2011.
Stock option activity under the Plan is summarized as follows:
2010 2009 2008
(Options in thousands)
Number of
Options
Weighted-
Average
Exercise
Price
Number of
Options
Weighted-
Average
Exercise
Price
Number of
Options
Weighted-
Average
Exercise
Price
Outstanding at beginning of year
8,545
$ 35.67
9,021
$ 38.51
9,024
$ 35.37
Granted
1,969
20.49
859
6.50
1,692
53.46
Exercised
(348)
20.63
(10)
19.45
(1,147)
34.26
Canceled, expired or forfeited
(3,240)
44.15
(1,325)
36.16
(548)
41.86
Outstanding at end of year
6,926
$ 28.15
8,545
$ 35.67
9,021
$ 38.51
Exercisable at end of year
4,111
$ 32.89
6,177
$ 35.82
5,774
$ 32.45
Restricted Stock Units
For restricted stock units paid in stock that were issued prior to 2008 and for all restricted stock units payable in cash, the fair value is
based on the trading price of our common stock on the grant date, less required adjustments to reflect the fair value of the awards as
dividends are not paid or accrued on these units until the restricted stock units vest. For restricted stock units paid in stock that were
issued subsequent to 2007, cash dividends are paid on a quarterly basis prior to vesting. The fair value of these units is based solely
on the trading price of our common stock on the grant date. The weighted-average grant date fair value of restricted stock units paid
in stock that were granted in 2008 was approximately $53 per share. No restricted stock units paid in stock were granted in 2010 or
2009.