The Extraordinary General Meeting of April 19, 2010 approved the Stock option grant program offered to directors and employees of the Company and its subsidiaries, who have been employed for at least two years. These options generally vest as follows: 20% after the first year, 30% after the second year and the remaining 50% after the third year, if the professional is still employed with the Company on each vesting date.
The exercise price of each option is established on the grant date at the weighted average of the shares quoted in the last 60 trading sessions, and may be adjusted by up to 30% to eliminate the effects of any speculative trading. Participants will have a maximum of five years in which to exercise the option, as from the grant date. On April 30, 2010, call options were granted for 6,510,000 shares, with an exercise price of R$10.19 per share.
The fair value attributed to these options was based on the Black-Scholes pricing model, whereby the value of each option was calculated at R$1.77 (US$1.02) for the portion that may be exercised as from the end of the first year, R$2.74 (US$1.58) for the portion that may be exercised as from the end of the second year and R$3.44 (US$1.99) for the portion that may be exercised as from the end of the third year. This model takes into consideration the value of the underlying asset, the exercise price, time remaining before exercising, probability of the option being exercised historical volatility based on daily closing price of the shares over the last six month and the weighted interest rate for the period of each lots based on the DI rate published by BM&FBovespa. The vesting period was determined in accordance with a management decision and considers the end of the grace period as the basis for calculation. Accordingly, the options were calculated with specific exercise timeframes of one year, two years and three years as the options are expected to be exercised at the end of each grace period.
|Thousands of Options||Weighted Average Exercise Price (R$)|
|Outstanding at begining of year||-||-|
|Exercisable at the end of the year||6,510||10.19|