HCA Holdings 2012 Annual Report Download - page 125

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HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (continued)
Stock Option, SAR and RSU Activity (continued)
estimate the expected term of the options and SARs. The expected term of the share-based award is limited by
the contractual term, and employee post-vesting termination behavior is incorporated in the historical exercise
behavior data. Compensation cost is recognized on the straight-line attribution method. The straight-line
attribution method requires that total compensation expense recognized must at least equal the vested portion of
the grant-date fair value. The expected volatility is derived using historical stock price information of certain peer
group companies for a period of time equal to the expected term. The risk-free interest rate is the approximate
yield on United States Treasury Strips having a life equal to the expected share-based award life on the date of
grant. The expected life is an estimate of the number of years a share-based award will be held before it is
exercised.
2012 2011 2010
Risk-free interest rate ...................................... 1.18% 0.89% 2.07%
Expected volatility ........................................ 50% 41% 35%
Expected life, in years ..................................... 6.25 5.00 5.00
Expected dividend yield .................................... ———
Information regarding Time Stock Options and SARs and Performance Stock Options and SARs activity
during 2012, 2011 and 2010 is summarized below (share amounts in thousands):
Time
Stock
Options
and
SARs
Performance
Stock
Options and
SARs
Total
Stock
Options
and
SARs
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
(dollars in millions)
Options outstanding,
December 31, 2009 ....... 25,443 26,474 51,917 $11.72
Granted .............. 843 121 964 15.73
Exercised ............. (1,598) (128) (1,726) 4.06
Cancelled ............. (171) (458) (629) 7.96
Options outstanding,
December 31, 2010 ....... 24,517 26,009 50,526 8.58
Granted .............. 644 644 1,288 23.35
Exercised ............. (3,312) (1,732) (5,044) 6.31
Cancelled ............. (110) (348) (458) 5.88
Options outstanding,
December 31, 2011 ....... 21,739 24,573 46,312 9.26
Granted .............. 3,174 3,174 6,348 27.03
Exercised ............. (5,530) (5,128) (10,658) 7.60
Cancelled ............. (192) (568) (760) 9.49
Options and SARs
outstanding, December 31,
2012 ................... 19,191 22,051 41,242 11.56 5.5 years $767
Options and SARs exercisable,
December 31, 2012 ....... 14,534 17,912 32,446 $ 9.38 4.6 years $674
The weighted average fair values of stock options and SARs granted during 2012, 2011 and 2010 were
$13.16, $8.53 and $7.13 per share, respectively. The total intrinsic value of stock options and SARs exercised in
F-17