The weighted average fair value per share of options granted during the years ended December
31, 2009 and 2008 was $1.04 and $3.14, respectively. The total intrinsic value of options
exercised under the Stock Option Plans was $0.04 million during the year ended December 31, 2008.
PFSweb Non-plan Options
Prior to the Company’s initial public offering, certain of the Company’s employees were
holders of stock options of the Company’s former parent company, Daisytek International Corporation
(“Daisytek”), issued under Daisytek’s stock option plans.
In connection with the completion of the Company’s spin-off from Daisytek on July 6, 2000 (the
“Spin-off”), all outstanding Daisytek stock options were replaced with substitute stock options.
Daisytek options held by PFSweb employees were replaced (at the option holder’s election made prior
to the Spin-off) with either options to acquire shares of PFSweb common stock or options to acquire
shares of both Daisytek common stock and PFSweb common stock (which may be exercised separately)
(the “Unstapled Options”). Options held by Daisytek employees were replaced (at the option holder’s
election made prior to the Spin-off) with either options to acquire shares of Daisytek common stock
or Unstapled Options.
As a result of the stock option replacement process described above, in conjunction with the
Spin-off, PFSweb stock options (the “Non-plan Options”) were issued to PFSweb and Daisytek
officers, directors and employees. These options were issued as one-time grants and were not issued
under the Stock Option Plans. The terms and provisions of the Non-plan Options are substantially
the same as options issued under the Stock Option Plans.
The following table summarizes stock option activity under the Non-plan Options:
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Weighted |
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Weighted |
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Average |
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|
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Average |
|
Remaining |
|
Aggregate |
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|
|
Exercise |
|
Contractual |
|
Intrinsic |
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|
Shares |
|
Price Per Share |
|
Price |
|
Life |
|
Value |
Outstanding, December 31, 2008 |
|
|
91,022 |
|
|
$ |
4.28 |
|
|
$ |
4.28 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Canceled |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
Outstanding, December 31, 2009 |
|
|
91,022 |
|
|
$ |
4.28 |
|
|
$ |
4.28 |
|
|
|
1.9 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2009 |
|
|
91,022 |
|
|
$ |
4.28 |
|
|
$ |
4.28 |
|
|
|
1.9 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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Fair Value
The fair value of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions used for grants of options under the Stock
Option Plans:
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|
|
|
|
|
|
| |
|
Year Ended |
|
Year Ended |
| |
|
December 31, 2009 |
|
December 31, 2008 |
Expected dividend yield |
|
|
— |
|
|
|
— |
|
Expected stock price volatility |
|
|
77% - 82 |
% |
|
|
81% - 85 |
% |
Weighted average stock price volatility |
|
|
81 |
% |
|
|
84 |
% |
Risk-free interest rate |
|
|
2.0% - 3.2 |
% |
|
|
3.1% - 3.8 |
% |
Expected life of options (years) |
|
|
6 |
|
|
|
6 |
|
The Black-Scholes option valuation model requires the input of highly subjective assumptions,
including the expected life of the stock-based award and stock-price volatility. The assumptions
listed above represent management’s best estimates, but these estimates involve inherent
uncertainties and the application of management judgment. As a result, if other assumptions had
been used, the Company’s recorded and pro forma stock-based compensation expense could have been
different. In addition, the Company is required to estimate the expected forfeiture rate and only
recognize expense for those shares expected to vest. If the Company’s actual forfeiture rate
70