EMC 2010 Annual Report Download - page 88
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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2010, the total unrecognized after-tax compensation cost for stock options, restricted stock and restricted stock units was $948.8
million. This non-cash expense will be recognized through 2015 with a weighted-average remaining period of 1.4 years.
Fair Value of EMC Information Infrastructure Options
The fair value of each option granted during 2010, 2009 and 2008 was estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions:
For the Year Ended
December 31,
EMC Stock Options 2010 2009 2008
Dividend yield None None None
Expected volatility 32.9% 35.4% 34.4%
Risk-free interest rate 1.8% 2.4% 2.8%
Expected term (in years) 4.8 4.5 4.4
Weighted-average fair value at grant date $ 6.25 $ 5.04 $ 4.82
For the Year Ended
December 31,
EMC Employee Stock Purchase Plan 2010 2009 2008
Dividend yield — None None
Expected volatility — 58.1% 40.0%
Risk-free interest rate — 0.4% 2.6%
Expected term (in years) — 0.5 0.5
Weighted-average fair value at grant date $ — $ 3.16 $ 4.32
Expected volatilities are based on our historical stock prices and implied volatilities from traded options in our stock. We use EMC historical data to
estimate the expected term of options granted within the valuation model. The risk-free interest rate was based on a treasury instrument whose term is
consistent with the expected life of the stock options. The assumptions for 2009 for the EMC Employee Stock Purchase Plan include only the January 1, 2009
grant due to the elimination of the look-back feature as of July 1, 2009. Accordingly, there are no assumptions for the ESPP for 2010.
Fair Value of VMware Options
The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2010, 2009 and 2008 was
estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
For the Year Ended
December 31,
VMware Stock Options 2010 2009 2008
Dividend yield None None None
Expected volatility 38.0% 36.1% 39.4%
Risk-free interest rate 1.5% 1.9% 2.5%
Expected term (in years) 3.5 3.7 3.4
Weighted-average fair value at grant date $ 18.05 $ 12.18 $ 17.88
For the Year Ended
December 31,
VMware Employee Stock Purchase Plan 2010 2009 2008
Dividend yield None None None
Expected volatility 33.1% 50.9% 39.3%
Risk-free interest rate 0.2% 0.3% 2.7%
Expected term (in years) 0.5 0.5 0.5
Weighted-average fair value at grant date $ 15.18 $ 7.79 $ 18.06
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