Tesla 2016 Annual Report Download - page 68

AdditionalinformationregardingallstockoptionsoutstandingandexercisableasofDecember31,2014issummarizedbelow:

 Options Outstanding Options Exercisable
Weighted Weighted
Average Average
Weighted Remaining Weighted Remaining
Average Contractual Average Contractual
Exercise Life (in Exercise Life (in
Range of Exercise Price Number Price years) Number Price years)
$2.70-$6.15   329,072  $ 3.13       327,696  $ 3.13   
$6.63-$6.63   7,030,489   6.63       7,029,293   6.63   
$9.96-$28.45   2,183,386   23.87       1,779,133   23.19   
$29.12-$31.07   1,105,021   30.00       606,484   30.00   
$31.17-$31.17   5,611,130   31.17       663,860   31.17   
$31.49-$38.42   2,376,417   33.25       1,167,109   32.82   
$39.10-$179.72   2,140,496   111.51       379,519   94.50   
$184.67-$259.32   498,658   233.06       84   198.09   
$259.94-$259.94   72,333   259.94       4,332   259.94   
$282.11-$282.11   25,958   282.11       —   —   
   21,372,960   35.93   5.48   11,957,510   12.37   3.63


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,2015and2014was$3.90billionand$4.00billion.Theintrinsicvalueofoptionsexercisable
was$2.98billionand$2.46billion,andtheintrinsicvalueofoptionsvestedandexpectedtovestwas$3.90billionand$4.00billionasofDecember31,2015and
2014.Thetotalintrinsicvalueofoptionsexercisedwas$395.6millionand$446.9millionfortheyearsendedDecember31,2015and2014.Theaggregate
intrinsicvalueofRSUsoutstandingasofDecember31,2015andDecember31,2014was$585.7millionand$329.2million.
Fair Value Adoption
Weutilizethefairvaluemethodinrecognizingstock-basedcompensationexpense.Underthefairvaluemethod,weestimatedthefairvalueofeachoption
awardandtheESPPonthegrantdategenerallyusingtheBlack-Scholesoptionpricingmodelandtheweightedaverageassumptionsnotedinthefollowingtable.

Year Ended December 31,
  2015 2014 2013
Risk-freeinterestrate:        
Stockoptions   1.6%  1.9%  1.3%
ESPP   0.3%  0.1%  0.1%
Expectedterm(inyears):         
Stockoptions   5.4   6.0   6.1
ESPP   0.5   0.5   0.5
Expectedvolatility:         
Stockoptions   48%  55%  57%
ESPP   42%  46%  43%
Dividendyield:         
Stockoptions   0.0%  0.0%  0.0%
ESPP   0.0%  0.0%  0.0%

Therisk-freeinterestratethatweuseisbasedontheUnitedStatesTreasuryyieldineffectatthetimeofgrantforzerocouponUnitedStatesTreasurynotes
withmaturitiesapproximatingeachgrant’sexpectedlife.Givenourlimitedhistorywithemployeegrants,weusethe“simplified”methodinestimatingthe
expectedtermforouremployeegrants.The“simplified”method,aspermittedbytheSEC,iscalculatedastheaverageofthetime-to-vestingandthecontractual
lifeoftheoptions.
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