Earthlink 2012 Annual Report Download - page 99

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Table of Contents EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
received by the stock option holders if they had all exercised their stock options on December 31, 2012
. The total intrinsic value of options
exercised during the years ended December 31, 2010, 2011 and 2012 was $1.0 million , $0.1 million and $0.1 million
, respectively. The
intrinsic value of stock options exercised represents the difference between the market value of Company’
s common stock at the time of exercise
and the exercise price, multiplied by the number of stock options exercised. As of December 31, 2012 , there was $2.8 million
of total
unrecognized compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 3.1 years .
The following table summarizes the status of the Company’s stock options as of December 31, 2012 :
The Company did not grant any stock options during the years ended December 31, 2010 and 2011. The fair value of stock options
granted during the year ended December 31, 2012 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 year ended December 31, 2012 was $1.65
per share. The
dividend yield assumption was based on the Company's history of dividend payouts at the time of grant. The expected volatility was based on a
combination of the Company's historical stock price and implied volatility. The selection of implied volatility data to estimate expected volatility
was based upon the availability of prices for actively traded options on the Company's stock. The risk-
free interest rate assumption was 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.
88
Stock Options
Stock Options Outstanding
Exercisable
Weighted
Average
Weighted
Weighted
Remaining
Average
Average
Range of
Number
Contractual
Exercise
Number
Exercise
Exercise Prices
Outstanding
Life
Price
Exercisable
Price
(in thousands)
(in thousands)
5.10
to
6.98
106
4.3
$
6.87
106
$
6.87
7.02
to
7.32
334
4.3
7.28
334
7.28
7.51
to
7.51
2,128
9.1
7.51
116
7.51
7.64
to
8.96
196
6.5
8.34
94
8.21
9.01
to
9.24
247
1.8
9.03
247
9.03
9.48
to
9.89
293
2.8
9.51
293
9.51
10.36
to
10.80
334
2.6
10.39
334
10.39
11.17
to
11.82
85
2.2
11.43
85
11.43
5.10
to
11.82
3,723
6.7
$
8.12
1,609
$
8.86
Year Ended
December 31, 2012
Dividend yield 2.69%
Expected volatility 32.50%
Risk-free interest rate 0.81%
Expected life 5 years