First Data 2014 Annual Report Download - page 80
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The fair value of FDH stock options granted for the years ended December 31, 2014, 2013, and 2012 were estimated at the date of grant using a Black-
Scholes option pricing model with the following weighted-average assumptions:
Risk-free interest rate 2.24% 1.40% 1.45%
Dividend yield — — —
Volatility 50.45% 56.61% 51.77%
Expected term (in years) 7 7 7
Fair value of stock $ 4.00 $ 3.50 $ 3.00
Fair value of options $ 2.14 $ 1.99 $ 1.60
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 FDH, or are expected to be paid in future periods.
Expected volatility—As FDH 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 Company’s previous 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 Company determined the fair value based on discounted cash flows and comparison to a group of guideline companies.
A summary of FDH stock option activity for the year ended December 31, 2014 is as follows:
Outstanding as of January 1, 2014
90.9
$ 3.28
Granted
16.4
$ 4.00
Exercised
(2.4)
$ 3.03
Cancelled / Forfeited
(1.8)
$ 3.24
Outstanding as of December 31, 2014
103.1
$ 3.40
7 years
Options exercisable as of December 31, 2014
45.3
$ 3.13
6 years
The total intrinsic value and amount paid related to stock options exercised during the twelve months ended December 31, 2014, 2013, and 2012 was $2
million, $3 million, and $0 million, respectively.
In the first quarter of 2014, FDH expanded participation in the plan by granting 31 million restricted stock awards to substantially all of the Company’s
employees. The restrictions on a majority of these awards will lapse upon the later of three years or following an initial public offering or upon certain
employment termination events. For the remainder of these awards, the restrictions will lapse following an initial public offering or upon certain employment
termination events.
Restricted stock awards and units were granted under the stock plan during 2014, 2013, and 2012. Grants were made as incentive awards. The restrictions on
the awards granted will lapse upon a qualified public offering, a change in control or certain employment termination or liquidity events. As of December 31,
2014 there was approximately $172 million of total unrecognized compensation expense related to restricted stock. Approximately $3 million will be
recognized over a period of
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