Yahoo 2013 Annual Report Download - page 119

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The fair value of option grants is determined using the Black-Scholes option pricing model with the following
weighted average assumptions:
Stock Options Purchase Plan(5)
Years Ended December 31, Years Ended December 31,
2011 2012 2013 2011 2012 2013
Expected dividend yield(1) ............................. 0.0% 0.0% 0% 0.0% 0.0% 0%
Risk-free interest rate(2) ............................... 1.3% 0.6% 0.7% 0.4% 0.4% 0.1%
Expected volatility(3) ................................. 36.9% 31.9% 33.3% 35.6% 33.7% 31.7%
Expected life (in years)(4) ............................. 4.03 4.02 3.60 1.04 1.21 0.25
(1) The Company currently has no history or expectation of paying cash dividends on its common stock in the
near future.
(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 4.25 years in 2011, 4.00 years in 2012, and 2.58 years in 2013. Options assumed in acquisitions had
expected lives of less than 4 years.
(5) Assumptions for the Employee Stock Purchase Plan relate to the annual average of the enrollment periods.
During the year ended December 31, 2012, enrollment was permitted in May and November of each year.
Beginning in 2013, enrollment was permitted in February, May, August, and November of each year.
Restricted stock awards activity under the Plans for the year ended December 31, 2013 is summarized as follows
(in thousands, except per share amounts):
Shares
Weighted Average
Grant Date Fair Value
Per Share
Awarded and unvested at December 31, 2012 ............................. 33,801 $17.63
Granted(*) ........................................................ 34,835 $25.55
Assumed in acquisitions ............................................. 2,364 $26.24
Vested ........................................................... (14,187) $15.49
Forfeited .......................................................... (7,229) $17.74
Awarded and unvested at December 31, 2013 ......................... 49,584 $24.20
(*) Includes the maximum number of shares issuable under the Company’s performance-based restricted stock
unit awards
As of December 31, 2013, there was $615 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 2.8 years.
The total fair value of restricted stock awards vested during the years ended December 31, 2011, 2012, and 2013
was $136 million, $171 million, and $220 million, respectively.
During the year ended December 31, 2013, 14.2 million shares subject to previously granted restricted stock
awards vested. A majority of these vested restricted stock awards were net share settled. The Company withheld
5.3 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.
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