Yahoo 2011 Annual Report Download - page 101

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,
2009 2010 2011 2009 2010 2011
Expected dividend yield(1) ........................... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Risk-free interest rate(2) ............................. 1.9% 1.6% 1.3% 2.7% 2.1% 1.3%
Expected volatility(3) ............................... 45.8% 34.7% 36.9% 63.2% 60.5% 35.6%
Expected life (in years)(4) ............................ 4.00 4.06 4.03 1.04 0.55 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 4 years in 2009, 4.5 years in 2010, and 4.25 years in 2011. Options assumed in acquisitions had
expected lives of less than 4 years. The expected life of options granted under the Employee Stock Purchase
Plan represents the amount of time remaining in the 24-month offering period.
(5) Assumptions for the Employee Stock Purchase Plan relate to the annual average of the enrollment periods.
Enrollment is currently permitted in May and November of each year.
Restricted stock awards activity for the year ended December 31, 2011 is summarized as follows (in thousands,
except per share amounts):
Shares
Weighted Average
Grant Date Fair Value
Awarded and unvested at December 31, 2010 ............................ 31,395 $17.99
Granted .......................................................... 25,044 $15.83
Assumed ......................................................... 466 $15.74
Vested ........................................................... (7,913) $17.19
Forfeited ......................................................... (10,217) $15.91
Awarded and unvested at December 31, 2011 ........................ 38,775 $17.28
As of December 31, 2011, there was $287 million of unamortized stock-based compensation cost related to
unvested restricted stock awards, which is expected to be recognized over a weighted average period of 2.3 years.
The total fair value of restricted stock awards vested during the years ended December 31, 2009, 2010, and 2011
was $375 million, $195 million, and $136 million, respectively.
During the year ended December 31, 2011, 7.9 million shares subject to previously granted restricted stock
awards and restricted stock units vested. A majority of these vested restricted stock awards and restricted stock
units were net share settled. The Company withheld 2.8 million shares based upon the Company’s closing stock
price on the vesting date to settle the employees’ minimum statutory obligation for the applicable income and
other employment taxes. The Company then remitted cash to the appropriate taxing authorities.
Total payments for the employees’ tax obligations to the relevant taxing authorities were $45 million for the year
ended December 31, 2011 and are reflected as a financing activity within the consolidated statements of cash
flows. The payments were used for tax withholdings related to the net share settlements of restricted stock units.
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