iHeartMedia 2012 Annual Report Download - page 110

Download and view the complete annual report

Please find page 110 of the 2012 iHeartMedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
107
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 solely
on continued service over a period of up to five years. The equity 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. CCOH
determined that the CCOH Dividend discussed in Note 5 was considered a change in capitalization and therefore adjusted outstanding
options as of March 15, 2012. No incremental compensation cost was recognized in connection with the adjustment.
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 historical volatility of CCOH’s stock over the expected life of the options. 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:
Years Ended December 31,
2012
2011
2010
Expected volatility
54% – 56%
57%
58%
Expected life in years
6.3
6.3
5.5 – 7.0
Risk-free interest rate
0.92% – 1.48%
1.26% – 2.75%
1.38% – 3.31%
Dividend yield
0%
0%
0%
The following table presents a summary of CCOH’s stock options outstanding at and stock option activity during the year ended
December 31, 2012 (“Price” reflects the weighted average exercise price per share):
(In thousands, except per share data)
Options
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding, January 1, 2012
8,991
$
15.10
Granted (1)
2,812
6.64
Exercised (2)
(1,029)
4.06
Forfeited
(884)
7.87
Expired
(1,509)
12.23
Outstanding, December 31, 2012
8,381
9.22
6.2 years
$ 8,813
Exercisable
4,548
11.26
4.5 years
$ 4,792
Expected to vest
3,574
9.53
8.3 years
$ 1,186
(1) The weighted average grant date fair value of CCOH options granted during the years ended December 31, 2012, 2011 and 2010
was $4.43, $8.30 and $5.65 per share, respectively.
(2) Cash received from option exercises during the years ended December 31, 2012, 2011 and 2010 was $6.4 million, $1.4 million
and $0.9 million, respectively. The total intrinsic value of the options exercised during the years ended December 31, 2012, 2011
and 2010 was $7.9 million, $1.5 million and $1.1 million, respectively.