LabCorp 2010 Annual Report Download - page 41

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The following table summarizes information concerning currently outstanding and exercisable options.
Options Outstanding Options Exercisable
Weighted-Average Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
$ 6.80 – 59.37 0.9 4.3 $51.41 0.9 $51.41
$59.38 – 67.60 1.7 8.1 $60.33 0.4 $60.42
$67.61 – 75.63 3.0 8.3 $72.67 0.9 $75.63
$75.64 – 80.37 1.0 6.3 $80.17 1.0 $80.31
6.6 7.4 $67.84 3.2 $68.09
LABORATORY CORPORATION OF AMERICA
Notes to Consolidated Financial Statements
The following table shows the weighted average grant-date
fair values of options and the weighted average assumptions
that the Company used to develop the fair value estimates:
2010 2009 2008
Fair value per option $ 14.12 $ 10.85 $ 13.25
Valuation assumptions
Weighted average expected life (in years) 3.1 3.0 3.2
Risk free interest rate 1.5% 1.1% 2.7%
Expected volatility
0.3 0.2 0.2
Expected dividend yield 0.0% 0.0% 0.0%
The Black Scholes model incorporates assumptions to
value stock-based awards. The risk-free interest rate for periods
within the contractual life of the option is based on a zero-
coupon U.S. government instrument over the contractual term
of the equity instrument. Expected volatility of the Company’s
stock is based on historical volatility of the Company’s stock.
The Company uses historical data to calculate the expected
life of the option. Groups of employees and non-employee
directors that have similar exercise behavior with regard to option
exercise timing and forfeiture rates are considered separately
for valuation purposes. For 2010, 2009 and 2008, expense
related to the Company’s stock option plan totaled $20.7, $18.7
and $17.3, respectively. The 2008 expense amount includes
$0.8 related to the acceleration of the recognition of stock
compensation as a result of the retirement of an Executive
Vice President.
Restricted Stock and Performance Shares
The Company grants restricted stock and performance shares
(“nonvested shares”) to officers, key employees, and non-
employee directors under all plans. Restricted stock becomes
vested annually in equal one third increments beginning on the
first anniversary of the grant. The performance share awards
represented a three year award opportunity for the period 2005-
2007 and became vested in 2008. A performance share grant
in 2008 represents a three year award opportunity for the period
2008-2010 and becomes vested in the first quarter of 2011. A
performance share grant in 2009 represents a three year award
opportunity for the period of 2009-2011 and becomes vested in
the first quarter of 2012. A performance share grant in 2010
represents a three year award opportunity for the period of
2010-2012 and becomes vested in the first quarter of 2013.
Performance share awards are subject to certain earnings per
share and revenue targets, the achievement of which may
increase or decrease the number of shares which the grantee
receives upon vesting. The unearned restricted stock and per-
formance share compensation is being amortized to expense
over the applicable vesting periods. For 2010, 2009 and 2008,
total restricted stock and performance share compensation
expense was $16.1, $13.6 and $14.0, respectively. The 2008
expense amount includes $1.2 related to the acceleration of the
recognition of stock compensation as a result of the retirement
of an Executive Vice President.