Snapple 2011 Annual Report Download - page 114

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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
94
DPS is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures
differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock-based
compensation expense only for those awards that are expected to vest.
The weighted average assumptions used to value grant options are detailed below:
Fair value of options at grant date
Risk free interest rate
Expected term of options (in years)
Dividend yield(1)
Expected volatility
For the Year Ended
December 31,
2011
$ 6.59
2.51%
6.0
2.75%
22.70%
2010
$ 6.99
2.65%
6.0
1.90%
24.00%
2009
$ 3.57
2.23%
6.1
—%
21.46%
____________________________
(1) The dividend yield is the calculated yield on the Company's stock at the time of the grant. During the fourth quarter of 2009,
the Company declared its first dividend; therefore, dividend yield is included as a valuation assumption for stock based
compensation awards for the years ended December 31, 2011 and 2010.
The table below summarizes stock option activity for the year ended December 31, 2011:
Outstanding as of December 31, 2010
Granted
Exercised
Forfeited or expired
Outstanding as of December 31, 2011
Exercisable as of December 31, 2011
Stock Options
2,632,935
737,701
(992,070)
(61,224)
2,317,342
707,846
Weighted
Average
Exercise Price
$ 23.14
36.42
20.83
28.32
28.25
23.54
Weighted
Average
Remaining
Contractual
Term (Years)
8.22
8.04
7.19
Aggregate
Intrinsic Value
(in millions)
$ 32
19
26
11
As of December 31, 2011, there were 2,280,033 stock options vested or expected to vest. The weighted average exercise price
of stock options granted for the years ended December 31, 2010 and 2009 was $32.36 and $13.48, respectively. As of December 31,
2011, there was $6 million of unrecognized compensation cost related to the nonvested stock options granted under the DPS stock
plans that is expected to be recognized over a weighted average period of 0.86 years.
Restricted Stock Units and Performance Share Units
In 2011, the Compensation Committee of the Board approved a PSU plan. Each PSU is equivalent in value to one share of
the Company's common stock. PSUs will vest three years from the beginning date of a pre-determined performance period to the
extent the Company has met two performance criteria during the performance period: (i) the percentage growth of net income and
(ii) the percentage yield from operating free cash flow.