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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
96
The weighted average assumptions used to value grant options are detailed below:
For the Year Ended
December 31,
2013 2012 2011
Fair value of options at grant date $ 6.92 $ 7.05 $ 6.59
Risk free interest rate 0.68% 0.87% 2.51%
Expected term of options (in years)(1) 4.5 5.1 6.0
Dividend yield 3.39% 3.52% 2.75%
Expected volatility(1) 27.42% 30.64% 22.70%
____________________________
(1) Because the Company lacked a meaningful set of historical data upon which to develop certain valuation assumptions, including
expected term and volatility of options granted, DPS elected to develop these valuation assumptions based on information
disclosed by similarly-situated companies, including multi-national consumer goods companies of similar market
capitalization.
The table below summarizes stock option activity for the year ended December 31, 2013:
Stock Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic Value
(in millions)
Outstanding as of January 1, 2013 2,001,908 $ 34.07 7.95 $ 20
Granted 580,184 43.82
Exercised (484,281) 30.24 8
Forfeited or expired (65,978) 39.74
Outstanding as of December 31, 2013 2,031,833 37.59 7.65 23
Exercisable as of December 31, 2013 826,302 33.78 6.62 12
As of December 31, 2013, there were 2,005,382 stock options vested or expected to vest. The weighted average exercise price
of stock options granted for the years ended December 31, 2012 and 2011 was $37.80 and $36.42, respectively. The aggregate
intrinsic value of the stock options exercised for the years ended December 31, 2012 and 2011 was $18 million and $19 million,
respectively. As of December 31, 2013, there was $5 million of unrecognized compensation cost related to unvested stock options
granted under the DPS stock plans that is expected to be recognized over a weighted average period of 0.81 years.