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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 14—Stock-Based Compensation (continued)
76
Our board of directors or its compensation committee may reduce the amount of the annual increase under the
2010 Equity Incentive Plan or 2010 Employee Stock Purchase Plan in any particular year. Options granted under the
2010 Equity Incentive Plan generally vest over four years and expire five or ten years from the date of grant.
The total stock-based compensation expense recognized was $9.5 million and $7.3 million for the years ended
December 31, 2011 and 2010, respectively, $6.8 million for the five months ended December 31, 2009 and $2.5 million
for the year ended July 31, 2009. Stock-based compensation for the years ended December 31, 2011 and 2010
includes expense related to awards of stock options and restricted stock units and purchases under the 2010 Employee
Stock Purchase Plan. The total income tax expense recognized as a component of stock-based compensation was
$1.8 million and $1.3 million for the years ended December 31, 2011 and 2010, respectively, $2.6 million for the five
months ended December 31, 2009 and $0.4 million for the year ended July 31, 2009.
Options and restricted stock units granted on or after July 21, 2010 are issued under the 2010 Equity Incentive
Plan and options granted prior to July 21, 2010 were issued under the 2001 Stock Plan, the predecessor to our 2010
Equity Incentive Plan. We have reserved shares of our Class A common stock and Class B common stock for issuance
under the 2010 Equity Incentive Plan and 2001 Stock Plan, respectively.
The following table summarizes information for the stock options and restricted stock units that we granted:
Year Ended December 31, Five Months Ended
December 31, 2009
Year Ended
July 31, 20092011 2010
Stock options granted . . . . . . . . . . . . . . . . . . . . . . . . 889,254 349,000 1,389,250 749,300
Weighted-average exercise price . . . . . . . . . . . . . . . $ 38.70 $ 32.38 $ 19.75 $ 11.32
Weighted-average grant-date fair value . . . . . . . . . . $ 18.62 $ 15.66 $ 9.47 $ 6.98
Restricted stock units granted. . . . . . . . . . . . . . . . . . 110,503 ———
Weighted-average grant-date fair value . . . . . . . . . . $ 33.46 $—$ —$—
We estimated the fair value of each stock option grant on the date of grant using the following weighted-average
assumptions:
Year Ended December 31, Five Months Ended
December 31, 2009
Year Ended
July 31, 20092011 2010
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . 1.92% 2.18% 2.56% 2.26%
Expected term (life) of options (in years) . . . . . . . . . 6.06 5.92 6.08 6.08
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . ————
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.35% 49.41% 46.9% 53.2%
Determining the fair value of stock-based awards at their respective grant dates requires considerable judgment,
including estimating expected volatility and expected term (life). We based our expected volatility on the historical
volatility of comparable public companies over the option’s expected term. We calculated our expected term based on
the simplified method, which is the mid-point between the weighted-average graded-vesting term and the contractual
term. The simplified method was chosen as a means to determine expected term as there is limited historical option
exercise experience due to our company being newly public. We derived the risk-free rate from the average yield for
the five-and seven-year zero-coupon U.S. Treasury Strips. We estimate forfeitures at the grant date based on our
historical forfeiture rate since the Plan’s inception and revise the estimate, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.
Stock Awards
In December 2009, our board of directors awarded 257,984 shares of common stock to our Chief Executive Officer
to compensate him for past services rendered to our company. The number of shares awarded was equal to the number
of shares subject to fully vested options that unintentionally expired unexercised in June 2009. The aggregate grant
date fair value of the December 2009 award was approximately $5.2 million, based on an estimated fair value of our
common stock of $20.01, as determined by our board of directors on the date of the award. We recorded the aggregate
grant date fair value as compensation and benefits expense on the date of the award.