Yahoo 2009 Annual Report Download - page 104

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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
The weighted average grant date fair value of options granted in the years ended December 31, 2007, 2008, and
2009 was $8.50, $7.66, and $5.59 per share, respectively.
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate
difference between the closing stock price of the Company’s common stock on December 31, 2009 and the
exercise price for in-the-money options) that would have been received by the option holders if all in-the-money
options had been exercised on December 31, 2009.
The total intrinsic value of options exercised in the years ended December 31, 2007, 2008, and 2009 was $393
million, $233 million, and $51 million, respectively.
As of December 31, 2009, there was $203 million of unamortized stock-based compensation expense related to
unvested stock options, which is expected to be recognized over a weighted average period of 2.2 years.
Cash received from option exercises and purchases of shares under the Restated Purchase Plan for the year ended
December 31, 2009 was $113 million.
The total tax benefit attributable to stock options exercised in the year ended December 31, 2009 was
$85 million.
The fair value of option grants is determined using the Black-Scholes option pricing model with the following
weighted average assumptions:
Stock Options Purchase Plans(5)
Years Ended December 31, Years Ended December 31,
2007 2008 2009 2007 2008 2009
Expected dividend yield(1) ............................ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Risk-free interest rate(2) .............................. 4.4% 2.6% 1.9% 4.4% 2.4% 2.7%
Expected volatility(3) ................................ 33.5% 47.4% 45.8% 32.4% 71.8% 63.2%
Expected life (in years)(4) ............................. 3.64 3.97 4.00 1.11 1.15 1.04
(1) The Company currently has no history or expectation of paying cash dividends on its common stock.
(2) The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of
the awards in effect at the time of grant.
(3) The Company estimates the volatility of its common stock at the date of grant based on the implied volatility
of publicly traded options on its common stock, with a term of one year or greater.
(4) The expected life of stock options granted under the Plans is based on historical exercise patterns, which the
Company believes are representative of future behavior. New grants issued by the Company had an expected
life of 3.75 years in 2007 and 4 years in 2008 and 2009. Options assumed in acquisitions had expected lives
of less than 4 years. The expected life of options granted under the Restated Purchase Plan represents the
amount of time remaining in the 24-month offering period.
(5) Assumptions for the Restated Purchase Plan relate to the annual average of the enrollment periods.
Enrollment is currently permitted in May and November of each year.
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