Verizon Wireless 2009 Annual Report Download - page 63

Notes to Consolidated Financial Statements continued
61
The following table summarizes Verizon’s stock option activity:
(shares in thousands)
Stock
Options
Weighted-
Average
Grant-Date
Fair Value
Outstanding, January 1, 2007 229,364 $ 46.48
Exercised (33,079) 38.50
Cancelled/Forfeited (21,422) 48.26
Outstanding, December 31, 2007 174,863 47.78
Exercised (218) 38.00
Cancelled/Forfeited (39,878) 48.13
Outstanding, December 31, 2008 134,767 47.69
Exercised (2) 26.33
Cancelled/Forfeited (31,145) 52.32
Outstanding, December 31, 2009 103,620 46.29
Total stock options outstanding at December 31, 2009 and 2008 were
exercisable. The number of stock options exercisable at December 31,
2007 was 174,838.
The following table summarizes information about Verizon’s stock options
outstanding as of December 31, 2009:
Range of
Exercise Prices
Stock Options
(in thousands)
Weighted-
Average
Remaining Life
(years)
Weighted-
Average
Exercise Price
$ 20.00-29.99 22 2.7 $ 28.02
30.00-39.99 18,380 3.6 36.40
40.00-49.99 50,897 1.2 43.97
50.00-59.99 34,321 0.6 55.04
Total 103,620 1.4 46.29
The total intrinsic value for stock options outstanding was not significant
as of December 31, 2009 and December 31, 2008. The total intrinsic value
for stock options exercised was $147 million in 2007 and not significant
in 2009 and 2008. The amount of cash received from the exercise of stock
options and the related tax benefits was not significant in 2009 and 2008
and was $1,274 million in 2007. The after-tax compensation expense for
stock options was not significant for 2009, 2008 and 2007.
The following table summarizes the assumptions used in the Black-
Scholes model during 2009:
Ranges
Risk-free rate 0.2% – 1.6%
Expected term (in years) 0.4 – 2.5
Expected volatility 35.4% – 61.5%
The risk-free rate is based on the U.S. Treasury yield curve in effect at the
time of the measurement date. Expected volatility was based on a blend
of the historical and implied volatility of publicly traded peer companies
for a period equal to the VARs expected life, ending on the measurement
date, and calculated on a monthly basis.
The following table summarizes the Value Appreciation Rights activity:
(shares in thousands) VARs
Weighted-
Average
Grant-Date
Fair Value
Outstanding rights, January 1, 2007 94,467 $ 16.99
Exercised (30,848) 15.07
Cancelled/Forfeited (3,207) 24.55
Outstanding rights, December 31, 2007 60,412 17.58
Exercised (31,817) 18.47
Cancelled/Forfeited (351) 19.01
Outstanding rights, December 31, 2008 28,244 16.54
Exercised (11,442) 16.53
Cancelled/Forfeited (211) 17.63
Outstanding rights, December 31, 2009 16,591 16.54
Stock-Based Compensation Expense
After-tax compensation expense for stock-based compensation related
to RSUs, PSUs, and VARs described above included in net income attribut-
able to Verizon was $492 million, $375 million and $750 million for 2009,
2008 and 2007, respectively.
Stock Options
The Plan provides for grants of stock options to employees at an option
price per share of 100% of the fair market value of Verizon common stock
on the date of grant. Each grant has a 10 year life, vesting equally over a
three year period, starting at the date of the grant. We have not granted
new stock options since 2004.