Apple 2011 Annual Report Download - page 70

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Stock Option Activity
A summary of the Company’
s stock option activity and related information for the three years ended September 24, 2011, is as follows (in
thousands, except per share amounts and contractual term in years):
Aggregate intrinsic value represents the value of the Company’
s closing stock price on the last trading day of the fiscal period in excess of the
weighted-
average exercise price multiplied by the number of options outstanding or exercisable. Total intrinsic value of options at time of
exercise was $2.6 billion, $2.0 billion and $827 million for 2011, 2010 and 2009, respectively.
Share-based Compensation
Share-based compensation cost for RSUs is measured based on the closing fair market value of the Company’
s common stock on the date of
grant. Share-based compensation cost for stock options and employee stock purchase plan rights (“stock purchase rights”)
is estimated at the
grant date and offering date, respectively, based on the fair-value as calculated by the BSM option-pricing model. The BSM option-
pricing
model incorporates various assumptions including expected volatility, expected life and interest rates. The expected volatility is based on the
historical volatility of the Company’s common stock over the most recent period commensurate with the expected life of the Company’
s stock
options and other relevant factors including implied volatility in market traded options on the Company’
s common stock. The Company bases its
expected life assumption on its historical experience and on the terms and conditions of the stock awards it grants to employees. The Company
recognizes share-based compensation cost as expense on a straight-line basis over the requisite service period.
The Company granted 1,370 stock options, 34,000 stock options and 234,000 stock options during 2011, 2010 and 2009, respectively. The
weighted-
average grant date fair value of stock options granted during 2011, 2010 and 2009 was $181.13, $108.58 and $46.71 per share,
respectively.
68
Outstanding Options
Number
of Options
Weighted
-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Balance at September 27, 2008
44,146
$
74.39
Options granted
234
$
106.84
Options cancelled
(1,241
)
$
122.98
Options exercised
(8,764
)
$
41.78
Balance at September 26, 2009
34,375
$
81.17
Options granted
34
$
202.00
Options assumed
98
$
11.99
Options cancelled
(430
)
$
136.27
Options exercised
(12,352
)
$
62.69
Balance at September 25, 2010
21,725
$
90.46
Options granted
1
$
342.62
Options cancelled
(163
)
$
128.42
Options exercised
(9,697
)
$
67.63
Balance at September 24, 2011
11,866
$
108.64
2.38
$
3,508,243
Exercisable at September 24, 2011
11,089
$
104.97
2.31
$
3,319,374
Expected to vest after September 24, 2011
777
$
161.23
3.38
$
188,869