Memorex 2011 Annual Report Download - page 69

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
options and stock appreciation rights is 1.1 million. The number of shares available for awards, as well as the terms of
outstanding awards, is subject to adjustments as provided in the 2011 Stock Incentive Plan for stock splits, stock dividends,
recapitalization and other similar events. Awards may be granted under the 2011 Stock Incentive Plan until the earlier to occur
of May 3, 2021 or the date on which all shares available for awards under the 2011 Stock Incentive Plan have been
purchased or acquired; provided, however, that incentive stock options may not be granted after February 10, 2021. As of
December 31, 2011, we had stock-based compensation awards consisting of stock options and restricted stock. As of
December 31, 2011, there were 3,799,009 shares available for grant under our 2011 Incentive Plan. No further shares were
available for grant under any other Stock Plan.
Stock Options
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The
assumptions used in the valuation model are supported primarily by historical indicators and current market conditions.
Volatility was calculated using the historical weekly close rate for a period of time equal to the expected term. The risk-free
rate of return was determined by using the U.S. Treasury yield curve in effect at the time of grant. The expected term was
calculated on an aggregated basis and estimated based on an analysis of options already exercised and any foreseeable
trends or changes in recipients’ behavior. In determining the expected term, we considered the vesting period of the awards,
the contractual term of the awards, historical average holding periods, stock price history, impacts from recent restructuring
initiatives and the relative weight for each of these factors. The dividend yield was based on the latest dividend payments
made on or announced by the date of the grant.
The following table summarizes our weighted average assumptions used in the valuation of options for the years ended
December 31:
2011 2010 2009
Volatility ............................................................ 44% 43% 41%
Risk-free interest rate ................................................... 2.13% 2.49% 2.13%
Expected life (months) .................................................. 70 66 65
Dividend yield ........................................................ —% —% —%
66