Tesla 2011 Annual Report Download - page 133

Table of Contents
Additional information regarding all stock options outstanding and exercisable as of December 31, 2009 is summarized below:
The aggregate intrinsic value represents the total pretax intrinsic value (i.e., the difference between our common stock price 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. The aggregate intrinsic value of options outstanding as of December 31, 2010 and 2009 was $250.1 million and
$13.8 million, respectively. The intrinsic value of options exercisable was $75.7 million and $6.1 million, and the intrinsic value of options
vested and expected to vest was $203.0 million and $12.3 million as of December 31, 2010 and 2009, respectively. The total intrinsic value of
options exercised was $10.0 million and $0.6 million for the years ended December 31, 2010 and 2009, respectively.
Fair Value Adoption
We adopted the fair value method on January 1, 2006 in recognizing stock-based compensation expense. Under the fair value method, we
estimated the fair value of each option award on the grant date using the Black-Scholes option pricing model and the weighted average
assumptions noted in the following table.
The weighted-average grant-date fair value for option awards granted during the years ended December 31, 2010, 2009 and 2008, was
$10.99, $3.00 and $0.68 per share, respectively.
The fair value of the shares of common stock underlying the stock options has historically been determined by the Board of Directors as
there was no public market for our common stock. The Board of Directors has determined fair value of the common stock at the time of each
grant of options by considering a number of objective and subjective factors including valuation of comparable companies, sales of convertible
preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock, and trends in the broader
automobile industry. We have not granted stock options with an exercise price that is less than the fair value of the underlying common stock as
determined at the time of grant by our Board of Directors, with input from management. The fair market value of the underlying common stock
was determined by the Board of Directors until the completion of our IPO when our common stock was listed on an established stock exchange.
132
Options Outstanding
Options Exercisable
Range of Exercise Price
Number
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in
years)
Number
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in
years)
$0.15
—
$
6.63
11,640,700
$
5.42
6.16
2,184,200
$
3.72
5.22
2010
2009
2008
Risk
-
free interest rate
2.0
%
2.2
%
2.2
%
Expected term (in years)
5.3
4.6
4.6
Expected volatility
71
%
64
%
53
%
Dividend yield
0
%
0
%
0
%