iHeartMedia 2001 Annual Report Download - page 94

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94
The weighted average fair value of stock options granted is required to be based on a theoretical option
pricing model. In actuality, because the company’s employee stock options are not traded on an
exchange, employees can receive no value nor derive any benefit from holding stock options under these
plans without an increase in the market price of Clear Channel stock. Such an increase in stock price
would benefit all stockholders commensurately.
Other
As a result of mergers during 2000, the Company assumed 2.7 million employee stock options that will
vest from January 2001 to April 2005. To the extent that these employees’ options vest post-merger, the
Company recognizes expense over the remaining vesting period. During the year ended December 31,
2001 and 2000, the Company recorded expense of $12.1 million and $3.8 million, respectively, related to
the post-merger vesting of employee stock options. Additionally, during 2001 and 2000, as a result of
severance negotiations with 20 employees, the Company accelerated the vesting of 109,000 and 470,000
existing employee stock options, respectively. Accordingly, the Company recorded expense during the
years ended December 31, 2001 and 2000 equal to the intrinsic value of the accelerated options on the
appropriate modification dates of $1.8 million and $11.7 million, respectively. The expense associated
with stock options is recorded on the statement of operations as a component of “non-cash compensation
expense”.
Common Stock Reserved for Future Issuance
Common stock is reserved for future issuances of, approximately 79.6 million shares for issuance upon
the various stock option plans to purchase the Company’s common stock (including 47.1 million options
currently granted), 9.3 million shares for issuance upon conversion of the Company’s 2.625% Senior
Convertible Notes, 9.5 million for issuance upon conversion of the Company’s 1.5% Senior Convertible
Notes, 3.1 million for issuance upon conversion of the Company’s LYONs, .3 million for issuance upon
conversion of the Company’s Common Stock Warrants, and 11.9 million shares reserved for issuance
upon consummation of a pending merger.