These excerpts taken from the GVHR 10-K filed Mar 17, 2008.
The Company adopted SFAS No. 123R in January of 2006. SFAS 123R requires that the costs of employee share-based payments be measured at fair value on the awards' grant date and, for those awards expected to vest, recognized in the financial statements over the requisite service period. The Company estimates the fair value of stock option awards on the date of grant utilizing the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. However, certain assumptions used in the Black-Scholes model, such as expected term, can be adjusted to incorporate the unique characteristics of the Company's stock option awards. Option valuation models require the input of somewhat subjective assumptions including expected stock price
volatility and expected term. The Company believes it is unlikely that materially different estimates for the assumptions used in estimating the fair value of stock options granted would be made based on the conditions suggested by actual historical experience and other data available at the time estimates were made. Restricted stock awards are valued at the price of the Company's common stock on the date of the grant. The Company utilizes judgment in the determination of expected forfeiture rates in its estimate of those share awards expected to vest. The forfeiture rates are adjusted as necessary based upon actual forfeiture experience.
The Company adopted SFAS No. 123R in January of 2006. SFAS 123R requires that the costs of employee share-based payments be measured at fair value