Verizon Wireless 2010 Annual Report Download - page 63

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Notes to Consolidated Financial Statements continued
61
Stock Options
The Plan provides for grants of stock options to participants 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.
The following table summarizes Verizon’s stock option activity:
(shares in thousands)
Stock
Options
Weighted-
Average
Exercise
Price
Outstanding, January 1, 2008 181,858 $ 45.94
Exercised (227) 36.54
Cancelled/Forfeited (41,473) 46.28
Outstanding, December 31, 2008 140,158 45.86
Exercised (2) 25.32
Cancelled/Forfeited (32,391) 50.31
Outstanding, December 31, 2009 107,765 44.52
Exercised (372) 34.51
Cancelled/Forfeited (50,549) 44.90
Outstanding, December 31, 2010 56,844 44.25
All stock options outstanding at December 31, 2010, 2009 and 2008 were
exercisable.
The following table summarizes information about Verizon’s stock options
outstanding as of December 31, 2010:
Range of
Exercise Prices
Stock Options
(in thousands)
Weighted-
Average
Remaining Life
(years)
Weighted-
Average
Exercise Price
$20.00 – 29.99 34 1.7 $ 27.91
30.00 – 39.99 18,146 2.6 35.02
40.00 – 49.99 19,973 1.1 45.21
50.00 – 59.99 18,691 0.1 52.21
Total 56,844 1.2 44.25
The total intrinsic value for stock options outstanding and stock options
exercised, and the after-tax compensation expense for stock options was
not significant as of and for the years ended December 31, 2010, 2009
and 2008, respectively.
The following table summarizes the assumptions used in the Black-
Scholes model during 2010:
Ranges
Risk-free rate 0.14% – 0.88%
Expected term (in years) 0.03 – 2.00
Expected volatility 31.05% – 47.56%
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.
The following table summarizes the Value Appreciation Rights activity:
(shares in thousands) VARs
Weighted-
Average
Grant-Date
Fair Value
Outstanding rights, January 1, 2008 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
Exercised (4,947) 24.47
Cancelled/Forfeited (75) 22.72
Outstanding rights, December 31, 2010 11,569 13.11
During 2010, 2009 and 2008, we paid $0.1 billion, $0.2 billion and $0.6
billion, respectively, to settle VARs classified as liability awards.
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 $0.5 billion, $0.5 billion and $0.4 billion for 2010, 2009
and 2008, respectively.