Sunoco 2010 Annual Report Download - page 106

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The following table summarizes information with respect to common stock option awards under Sunoco’s
stock-based incentive plans (dollars in millions, except per-share and per-option amounts):
Shares
Under Option
Weighted-
Average
Option Price
Per Share
Weighted-
Average
Fair Value
Per Option*
Intrinsic
Value
Outstanding, December 31, 2007 ..... 1,572,308 $63.35
Granted ........................... 684,400 $35.29 $8.11
Exercised ......................... (17,815) $15.58 $1
Canceled .......................... (2,120) $16.44
Outstanding, December 31, 2008 ..... 2,236,773 $55.19
Granted ........................... 216,100 $27.76 $7.51
Exercised ......................... (35,890) $12.63 $1
Canceled .......................... (84,167) $46.69
Outstanding, December 31, 2009 ..... 2,332,816 $53.61
Granted ........................... 644,800 $28.26 $9.00
Exercised** ........................ (7,000) $26.05 $—
Canceled .......................... (207,134) $48.90
Outstanding, December 31, 2010 ..... 2,763,482*** $48.12 $14
Exercisable, December 31
2008 .............................. 1,049,939 $63.85
2009 .............................. 1,702,042 $61.35
2010 .............................. 1,831,871*** $57.57 $4
*Represents the weighted-average fair value per option granted as of the date of grant.
**Cash received by the Company upon exercise amounted to less than $1 million and the related tax benefit realized amounted to
less than $1 million.
***The weighted-average remaining contractual term of outstanding options and exercisable options was 7.1 and 6.3 years,
respectively.
Outstanding common stock award units under the Company’s stock-based incentive plans mature upon
completion of a three- to ten-year service period or upon attainment of predetermined performance targets during
a three-year period. For performance-based awards, adjustments for attainment of performance targets can range
from 0-150 percent of the award grant. Awards are payable in cash or common stock as determined on the date of
grant. Awards to be paid in cash are classified as liabilities in the Company’s consolidated balance sheets and are
re-measured for expense purposes at fair value each period (based on the fair value of an equivalent number of
Sunoco common shares at the end of the period) with any change in fair value recognized as an increase or
decrease in income. For service-based awards to be settled in common stock, the grant-date fair value is based on
the closing price of the Company’s shares on the date of grant. For performance-based awards to be settled in
common stock, the payout of which is determined by market conditions related to stock price performance, the
grant-date fair value is generally estimated using a Monte Carlo simulation model. Use of this model requires the
Company to make certain assumptions regarding expected volatility of the Company’s stock price during the
vesting period as well as regarding the risk-free interest rate and correlations of stock returns among the
Company and its peers. The Company uses historical share prices, for a period equivalent to the award’s term, to
estimate the expected volatility of the Company’s share price. The risk-free interest rate is based on the U.S.
Treasury yield curve at the date of grant for a term that approximates the award’s term. Correlations of stock
returns among the Company and its peers are calculated using historical daily stock-return data for a period
equivalent to the award’s term.
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