Earthlink 2007 Annual Report Download - page 96

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EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED—(Continued)
The following table summarizes the status of the Company's stock options as of December 31, 2007:
Valuation Assumptions for Stock Options
The fair value of stock options granted during the years ended December 31, 2005, 2006 and 2007 was estimated using the Black-Scholes
option-pricing model with the following assumptions:
The weighted average grant date fair value of options granted during the years ended December 31, 2005, 2006 and 2007 was $4.65, $3.28
and $2.79, respectively.
The dividend yield assumption is based on the Company's history and expectation of future dividend payouts. The expected volatility is
based on a combination of the Company's historical stock price and implied volatility. The selection of implied volatility data to estimate
expected volatility is based upon the availability of prices for actively traded options on the Company's stock. The risk-free interest rate
assumption is based upon the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the
option. The expected life of employee stock options represents the weighted-average period the stock options are expected to remain
outstanding.
89
Stock Options Outstanding
Stock Options Exercisable
Range of
Exercise Prices
Number
Outstanding
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise
Price
(in thousands)
(in thousands)
$ 5.10 to $ 6.63
1,182
4.8
$
5.61
1,013
$
5.70
6.72 to 7.02
1,388
9.0
6.91
293
6.89
7.10 to 7.31
1,934
9.3
7.29
962
7.29
7.32 to 9.01
1,895
7.0
8.57
1,219
8.78
9.24 to 9.93
1,419
5.9
9.55
877
9.59
10.06 to 10.06
1,344
2.7
10.06
1,344
10.06
10.36 to 11.17
1,910
7.4
10.48
1,462
10.50
11.18 to 48.61
2,355
3.3
21.16
2,233
21.69
$ 5.10 to $48.61
13,427
6.2
$
10.68
9,403
$
11.83
Year Ended December 31,
2005
2006
2007
Dividend yield
0
%
0
%
0
%
Expected volatility
49
%
43
%
39
%
Risk
-
free interest rate
4.03
%
4.86
%
4.78
%
Expected life
4.7 years
4.3 years
4.3 years