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Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13—STOCK-BASED COMPENSATION (Continued)
Stock Options
A summary of changes in outstanding stock options is as follows:
The fair value of each stock option award is estimated on the grant date using the Black-Scholes option pricing model. Approximately
0.9 million and 15.7 million stock options were granted by the Company during the years ended December 31, 2009 and 2008, respectively.
There were no stock options granted by the Company during the year ended December 31, 2007.
The Black-
Scholes option pricing model incorporates various assumptions, including expected volatility and expected term. For purposes of
this model, no dividends have been assumed. Due to the lack of sufficient historical IAC stock price volatilities subsequent to the Spin-Off,
expected stock price volatilities are estimated based on historical stock price volatilities of peer companies operating in the same industry sector
as IAC. The risk-free interest rates are based on U.S. Treasury yields for notes with comparable terms as the awards, in effect at the grant date.
The expected term of options granted is based on analyses of historical employee termination rates and option exercise patterns, giving
consideration to expectations of future employee behavior. The following are the weighted average assumptions used in the Black-Scholes
option pricing model:
The weighted average fair value of stock options granted during the years ended December 31, 2009 and 2008 with exercise prices equal to
the market prices of IAC's common stock on the date of grant was $8.95 and $7.46, respectively. There were no stock options issued during the
year ended December 31, 2009 with exercise prices greater than the market value of IAC's common stock on the date of grant. The weighted
average exercise price and weighted average fair value of stock options granted during the year ended December 31, 2008 with exercise prices
greater than the market value of IAC's common stock on the date of grant were $22.69 and $6.48, respectively.
95
December 31, 2009
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(Shares and intrinsic value in thousands)
Outstanding at January 1, 2009
17,165
$
20.77
Granted
929
17.45
Exercised
(365
)
10.35
Forfeited
(2,265
)
18.36
Expired
(798
)
26.15
Outstanding at December 31, 2009
14,666
$
20.89
7.1
32,139
Options exercisable
4,691
$
19.85
5.3
10,786
Years Ended December 31,
2009
2008
Expected volatility
59%
47%
Risk
-
free interest rate
2.1%
2.6%
Expected term
4.9 years
4.4 years
Dividend yield