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Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13—STOCK-BASED COMPENSATION (Continued)
to 2010, due to the lack of sufficient historical IAC stock price volatilities subsequent to the Spin-Off, expected stock price volatilities were
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 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, 2010, 2009 and 2008 with exercise prices
equal to the market prices of IAC's common stock on the date of grant was $6.38, $8.95 and $7.46, respectively. The weighted average exercise
price and weighted average fair value of stock options granted during the years ended December 31, 2010 and 2008 with exercise prices greater
than the market value of IAC's common stock on the date of grant were $32.00 and $11.05; and $22.69 and $6.48, 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 aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between IAC's closing stock price
on the last trading day of 2010 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the
option holders had all option holders exercised their options on December 31, 2010. This amount changes based on the fair market value of
IAC's common stock. The total intrinsic value of stock options exercised during the years ended December 31, 2010, 2009 and 2008 was
$16.4 million, $2.8 million and $7.6 million, respectively.
Cash received from stock option exercises and the related tax benefit realized for the years ended December 31, 2010, 2009 and 2008 were:
$39.1 million and $8.6 million; $3.8 million and $0.8 million; and $8.5 million and $2.1 million, respectively.
94
Years Ended December 31,
2010 2009 2008
Expected volatility
30%
59%
47%
Risk
-
free interest rate
2.4%
2.1%
2.6%
Expected term
5.6 years
4.9 years
4.4 years
Dividend yield
0