Expedia 2009 Annual Report Download - page 96

Download and view the complete annual report

Please find page 96 of the 2009 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

Expedia, Inc.
Notes to Consolidated Financial Statements — (Continued)
NOTE 8 — Stock-Based Awards and Other Equity Instruments
Pursuant to the Amended and Restated Expedia, Inc. 2005 Stock and Annual Incentive Plan, we may grant
restricted stock, restricted stock awards, RSUs, stock options and other stock-based awards to directors, officers,
employees and consultants. As of December 31, 2009, we had approximately 31 million shares of common stock
reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan. We issue new shares to
satisfy the exercise or release of stock-based awards.
The following table presents a summary of our stock option activity:
Options
Weighted
Average
Exercise Price
Remaining
Contractual Life
Aggregate
Intrinsic Value
(In thousands) (In years) (In thousands)
Balance as of January 1, 2007 ..... 23,133 $16.52
Exercised ...................... (13,242) 10.30
Cancelled ..................... (216) 29.61
Balance as of December 31, 2007 . . 9,675 24.74
Granted ....................... 1,275 8.14
Exercised ...................... (618) 10.14
Cancelled ..................... (498) 29.14
Balance as of December 31, 2008 . . 9,834 23.29
Granted ....................... 10,324 7.83
Exercised ...................... (879) 17.88
Cancelled ..................... (1,278) 16.46
Balance as of December 31, 2009 . . 18,001 15.17 5.3 $216,564
Exercisable as of December 31,
2009 ....................... 3,446 19.21 1.6 24,707
Vested and expected to vest after
December 31, 2009 ............ 15,610 16.29 5.1 171,683
The aggregate intrinsic value of outstanding options shown in the stock option activity table above
represents the total pretax intrinsic value at December 31, 2009, based on our closing stock price of $25.73 as of
the last trading date. The total intrinsic value of stock options exercised was $6 million, $7 million and
$299 million for the years ended December 31, 2009, 2008 and 2007.
During 2009, we awarded stock options as our primary form of stock-based compensation. During 2008, we
also granted stock options to certain key employees. The fair value of stock options granted during the year
ended December 31, 2009 and 2008 was estimated at the date of grant using the Black-Scholes option-pricing
model, assuming no dividends and the following weighted average assumptions:
2009 2008
Risk-free interest rate ................................................ 1.75% 2.18%
Expected volatility ................................................... 49.96% 45.63%
Expected life (in years) ............................................... 4.72 4.54
Weighted-average estimated fair value of options granted during the year ....... $ 3.31 $ 3.38
In 2007, our Chairman and Senior Executive exercised options to purchase 9.5 million shares. 2.3 million
shares were withheld and concurrently cancelled by the Company to cover the exercise price of $8.59 per share
and 3.5 million shares were withheld and concurrently cancelled to cover tax obligations, with a net delivery of
3.7 million shares.
F-24