First Data 2009 Annual Report Download - page 157

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Risk-free interest rate—The risk-free rate for stock options granted during the period was determined by
using a zero-coupon U.S. Treasury rate for the periods that coincided with the expected terms listed above.
Expected dividend yield—No routine dividends are currently being paid by Holdings, or are expected to be
paid in future periods.
Expected volatility—As Holdings is a non-publicly traded company, the expected volatility is based on the
historical volatilities of a group of guideline companies.
Expected term—The Company estimated the expected term by considering the historical exercise and
termination behavior of employees that participated in the predecessor equity plans, the vesting conditions of
options granted under the stock plan, as well as the impact of limited liquidity for common stock of a
non-publicly traded company.
Fair value of stock—The fair value of the stock was $3 per share as of December 31, 2009. The Company
relied in part upon a third party valuation firm in determining the fair value of Holdings stock. All key
assumptions and valuations were determined by and are the responsibility of management.
A summary of Holdings stock option activity for the year ended December 31, 2009 is as follows (options in
millions):
2009
Options
Weighted-
Average
Exercise
Price
Remaining
Contractual
Term
Outstanding at January 1 ................................. 59.1 $5
Granted .............................................. 14.0 $3
Exercised ............................................. —
Cancelled / Forfeited .................................... (6.0) $5
Outstanding at December 31 .............................. 67.1 $5 8 years
Options exercisable at December 31 ........................ 13.0 $5 8 years
Options outstanding at December 31 expected to vest (a) ....... 23.8 $4 8 years
(a) Excludes performance stock options that did not vest and cannot be concluded to be probable of vesting in
the future due to not meeting performance targets as noted above.
Restricted Stock Awards and Restricted Stock Units
Restricted stock awards were granted under the stock plan during 2009 and 2008. Grants were made as
incentive awards. During the successor period from September 25, 2007 through December 31, 2007, no
restricted stock awards or units were granted. Most restricted stock awards and units will vest on September 24,
2012. The restricted stock awards and units also have certain accelerated vesting provisions upon a change in
control, an initial public offering, and certain termination events.
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