The nonvested shares in the tables above include 1.9 million shares that were deemed granted in
2005 for accounting purposes under the 2004 Plan in accordance with the provisions of our Long-Term
Retention and Deferred Compensation Plan. The plan allows certain executive officers to defer awards
of equity compensation and in lieu thereof, an equivalent number of RSUs available under stockholder-
approved plans will be credited to an account for the executive. Under the terms of this plan, certain
executives were granted the right under the 2004 Plan to receive annual RSU grants beginning in 2005
and continuing until 2014. Each annual credit is subject to continued service by the executive and all
such future grants are deemed granted in 2005 for the purpose of determining stock-based
compensation expense. The grants have varying vesting dates from 2012 through 2015 but payment of
vested RSUs will be generally deferred until September 30, 2015, subject to certain exceptions. At
December 31, 2011, 1.2 million nonvested shares had been granted and 0.7 million nonvested shares
will be granted in 2012 through 2014.
In addition, under the terms of our Long-Term Retention and Deferred Compensation Plan, annual
grants may be increased if certain common stock price targets are achieved. We used a Monte-Carlo
simulation model to estimate the value and number of RSUs expected to be granted in the future. This
model involves forecasting potential future stock price paths based on the expected return on the
common stock and its volatility, then calculating the number of RSUs expected to be granted based on
the results of the simulations.
The following assumptions were used with respect to the Monte Carlo simulation model:
Expected annual return . . . . . . . . . . 9.80%
Expected daily return . . . . . . . . . . . . 0.04%
Daily standard deviation . . . . . . . . . . 2.09%
We estimated that 0.4 million restricted units would be granted as a result of achieving the
common stock price targets. Such units had a weighted average fair value of $46.61 per unit, an
aggregate fair value of $18.7 million and a weighted average remaining contractual life of six years.
The tables above also include 1.0 million RSUs deemed granted in 2008 for accounting purposes.
An executive was granted the right to receive five annual grants of 200,000 RSUs beginning in
September 2015 and continuing until 2019. Each annual grant is subject to continued service by the
executive. The first three annual grants will each vest in full in 2020 and the fourth and fifth annual
grants will each vest ratably over a three year period from the date of the grant. The grant date for
accounting purposes for all 1.0 million of these RSUs is March 2008.
At certain times a sufficient number of shares are not available for issuance under our stock
compensation plans to satisfy all awards deemed granted for accounting purposes. At such times, we
have reclassified and accounted for as liability awards the number of shares deemed granted in excess
of available shares, until such time that the number of available shares is increased to a sufficient level
to satisfy such awards, at which point the awards are reclassified back to equity awards.
Stock Options
At December 31, 2011, there were 6,176 stock options outstanding with an average exercise price
of $7.92 per share and an average remaining life of 0.7 years. The intrinsic value of options exercised
in the years ended December 31, 2011, 2010 and 2009 was $22,000, $0.4 million and $0.1 million,
respectively, and we received $8,000, $0.2 million and $0.1 million, respectively, upon the exercise of
such options.
F-34