Sprint - Nextel 2011 Annual Report Download - page 99

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Options
The fair value of each option award is estimated on the grant date using the Black-Scholes option valuation model, based on several assumptions including the
risk-free interest rate, volatility, expected dividend yield and expected term. Options outstanding as of December 31, 2011 include options granted under the 2007 Plan,
the 1997 Program, the Nextel Plan, and the MISOP, as discussed above. The risk-free interest rate used is based on the zero-coupon U.S. Treasury bond, with a term equal
to the expected term of the options. The volatility used is the implied volatility from traded options on our common shares. The expected dividend yield used is estimated
based on our historical dividend yield and other factors. The expected term of options granted is estimated using the simplified method, defined as the average of the
vesting term and the contractual term as our historical data is not expected to represent the future expected term of equity awards due to our severance activities over the
last several years.
The following table provides the estimated fair value and assumptions used in determining the fair value of option awards granted during 2011, 2010 and 2009:
A summary of the status of the options under our option plans as of December 31, 2011, and changes during the year ended December 31, 2011, is presented
below:
F-32
2011 2010 2009
Weighted average grant date fair value $1.89 $1.97 $3.07
Risk free interest rate 2.34 - 2.55% 2.71 - 2.74% 2.05 - 2.86%
Volatility 41.8 - 42.9% 58.5% 72.0 - 126.2%
Weighted average expected volatility 42.9% 58.5% 113.6%
Expected dividend yield —% —% —%
Weighted average expected dividend yield —% —% —%
Expected term (years) 6.0 6.0 - 6.25 6.25 - 6.5
Options granted (millions) 8 8 28
Shares
Under
Option
Weighted
Average
per
Share
Exercise
Price
Weighted
Average Remaining
Contractual Term
Aggregate
Intrinsic
Value
(in millions) (in years) (in millions)
Outstanding at January 1, 2011 72 $ 10.79
Granted 8 $ 4.22
Exercised (2) $ 3.60
Forfeited/expired (13) $ 22.37
Outstanding at December 31, 2011 65 $ 8.16 6.19 $
—
Vested or expected to vest at December 31, 2011 63 $ 8.31 6.11 $
—
Exercisable at December 31, 2011 39 $ 11.14 4.89 $
—