Windstream 2011 Annual Report Download - page 175

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-67
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing
sale price of Windstream's common stock as reported on the NASDAQ Global Select Market on December 31, 2011 and the
option exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders
if all option holders had exercised their options on December 31, 2011. This amount changes based on the fair market value of
Windstream's common stock. The aggregate intrinsic value of options exercised during the year ended December 31, 2011 was
approximately $1.7 million.
The weighted average fair value of the stock options granted, estimated on the dates of grant using the Hull-White II Lattice
option-pricing model, was $3.78 using the following assumptions:
Expected forfeiture rate
Risk free interest rate range
Expected stock price volatility range
Expected dividend yield
December 31,
2011
7.42%
0.00% to 2.00%
6.04% to 34.79%
8.50%
The Hull-White II Lattice option-pricing model used a regression model to predict the probability of exercise using an in-the-
money ratio at different points within the lattice model based on PAETEC's historical data.
Total compensation expense related to stock options granted was approximately $0.1 million for the year ended December 31,
2011.
The following table summarizes stock option information as of December 31, 2011:
Range of Exercise Prices
$0.00-$4.70
$4.71-$8.30
$8.31-$14.00
$14.01-$29.27
Options Outstanding
(Thousands)
Number of
Options
930.3
850.7
919.3
803.0
3,503.3
Weighted
Average
Exercise
Price
$ 3.92
$ 7.22
$ 10.11
$ 20.45
$ 10.13
Options Exercisable
(Thousands)
Number of
Options
908.5
565.7
750.6
776.4
3,001.2
Weighted
Average
Exercise
Price
$ 3.95
$ 6.80
$ 10.24
$ 20.57
$ 10.36
As of December 31, 2011, there was approximately $0.6 million of total unrecognized stock-based compensation expense
related to unvested stock options granted under the Stock Incentive Plans. We expect to recognize the expense over a weighted
average period of approximately 0.4 years.
10. Merger, Integration and Restructuring Charges:
Costs triggered by strategic transactions, including transaction, rebranding and system conversion costs are unpredictable by
nature and primarily include charges for accounting, legal, broker fees, employee transition costs, as well as certain financing
and other miscellaneous costs associated with the completed acquisitions of the acquired businesses. These costs are considered
indirect or general and are expensed when incurred in accordance with authoritative guidance on business combinations.
Restructuring charges, consisting primarily of severance and employee benefit costs, are triggered by our continued evaluation
of our operating structure and identification of opportunities for increased operational efficiency and effectiveness.