iHeartMedia 2010 Annual Report Download - page 109

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
relationship with CCMH prior to the lapse of the restriction. The following table presents a summary of the CCMH’s restricted stock
outstanding at and restricted stock activity during the year ended December 31, 2010 (“Price” reflects the weighted average share
price at the date of grant):
(In thousands, except per share data)
On August 23, 2010, Mark P. Mays tendered 200,000 shares to CCMH for purchase at $36.00 per share pursuant to a put option
included in his amended employment agreement.
CCOH Share-Based Awards
CCOH Stock Options
The Company’s subsidiary, CCOH, grants options to purchase shares of its Class A common stock to its employees and directors and
its affiliates under its equity incentive plan typically at no less than the fair market value of the underlying stock on the date of grant.
These options are granted for a term not exceeding ten years and are forfeited, except in certain circumstances, in the event the
employee or director terminates his or her employment or relationship with CCOH or one of its affiliates. These options vest over a
period of up to five years. A portion of the options granted vest based solely on continued service over a period of up to four years
with the remainder becoming eligible to vest over five years if certain predetermined performance targets are met. The incentive stock
plan contains anti-dilutive provisions that permit an adjustment of the number of shares of CCOH’s common stock represented by
each option for any change in capitalization.
The fair value of each option awarded on CCOH common stock is estimated on the date of grant using a Black-Scholes option-pricing
model. Expected volatilities are based on implied volatilities from traded options on CCOH’s stock, historical volatility on CCOH’s
stock, and other factors. The expected life of options granted represents the period of time that options granted are expected to be
outstanding. CCOH uses historical data to estimate option exercises and employee terminations within the valuation model. CCOH
includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of
awards. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the
expected life of the option. The following assumptions were used to calculate the fair value of CCOH’s options on the date of grant:
100
Awards Price
Outstandin
g
Januar
y
1, 2010 1,377 $ 36.00
Granted
—
n/a
Vested (restriction la
p
sed) (466) 36.00
Forfeited
(16) 36.00
Outstandin
g
, December 31, 2010 895 36.00
Post-Mer
g
er Pre-Mer
g
er
Years Ended December 31,
Period from
July 31 through
December 31,
Period from
January 1
throu
g
h Jul
y
30,
201
0
2009 2008 2008
Ex
p
ected volatilit
y
58% 58% n/a 27%
Ex
p
ected life in
y
ears 5.5
–
7.0 5.5
–
7.
0
n/a 5.5
–
7.0
Ris
k
-free interest rate 1.38%
–
3.31% 2.31%
–
3.25% n/a 3.24%
–
3.38%
Dividend
y
ield 0% 0% n/a 0%