LabCorp 2011 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2011 LabCorp 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 52

  • 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

39
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 0.5 3.3 $50.89 0.5 $50.89
$59.38 – 67.60 1.2 7.1 $60.24 0.6 $60.17
$67.61 – 75.63 2.4 7.4 $72.44 1.4 $74.10
$75.64 – 98.49 2.2 7.8 $87.17 0.7 $80.29
6.3 7.2 $73.66 3.2 $69.44
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:
2011 2010 2009
Fair value per option $ 17.06 $ 14.12 $ 10.85
Valuation assumptions
Weighted average expected life (in years) 3.4 3.1 3.0
Risk free interest rate 1.0% 1.5% 1.1%
Expected volatility
0.2 0.3 0.2
Expected dividend yield – – –
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 2011, 2010 and 2009,
expense related to the Company’s stock option plan totaled
$24.9, $20.7 and $18.7, respectively.
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. A performance share grant in
2009 represents a three year award opportunity for the period
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. A performance share grant in 2011
represents a three year award opportunity for the period of
2011-2013 and becomes vested in the first quarter of 2014.
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
performance share compensation is being amortized to expense
over the applicable vesting periods. For 2011, 2010 and 2009,
total restricted stock and performance share compensation
expense was $21.3, $16.1 and $13.6, respectively.