IAC currently has two active plans under which awards have been granted, which cover stock options to acquire shares of IAC common stock, RSUs, PSUs and restricted stock, as well as provide for the future grant of these and other equity awards. These plans are: the IAC 2008 Stock and Annual Incentive Plan (the "2008 Plan") and the IAC 2005 Stock and Annual Incentive Plan (the "2005 Plan"). Under the 2008 Plan, the Company was originally authorized to grant stock options, RSUs, PSUs, restricted stock and other equity based awards for up to 20.0 million shares of IAC common stock. Under the 2005 Plan, the Company was originally authorized to grant stock options, RSUs, PSUs, restricted stock and other equity based awards for up to 20.0 million shares of IAC common stock, adjusted to reflect IAC's one-for-two reverse stock split in August 2008. The active plans described above authorize the Company to grant awards to its employees, officers, directors and consultants. At December 31, 2010, there were 12.7 million shares available for grant under the Company's stock-based compensation plans.

The plans described above have a stated term of ten years and provide that the exercise price of stock options granted will not be less than the market price of the Company's common stock on the grant date. The plans do not specify grant dates or vesting schedules as those determinations have been delegated to the Compensation and Human Resources Committee of IAC's Board of Directors (the "Committee"). Each grant agreement reflects the vesting schedule for that particular grant as determined by the Committee. Broad-based stock option awards to date have generally vested in equal annual installments over a four-year period and RSU awards to date have generally vested in equal annual installments over a five-year period, in each case, from the grant date. PSU awards to date generally cliff vest at the end of a two to three-year period from the date of grant. In addition to equity awards outstanding under the two active plans described above, stock options and other equity awards outstanding under terminated plans and plans assumed in acquisitions are reflected in the information set forth below.

The amount of stock-based compensation expense recognized in the consolidated statement of operations is reduced by estimated forfeitures, as the expense recorded is based on awards that are ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate.

In connection with the Spin-Off, the majority of outstanding share-based compensation instruments of the Company were modified. Accordingly, on August 20, 2008, the Company recorded a one-time charge of $31.5 million of which $15.1 million was included in continuing operations and $16.5 million was included in discontinued operations. This one-time charge was principally related to the acceleration of RSUs granted prior to August 8, 2005 or that were scheduled to vest on or before February 28, 2009. In addition, PSUs granted to non-corporate employees in 2007 were not accelerated but were converted into RSUs with the same vesting schedule. All equity awards held by IAC employees were converted into either awards denominated solely in IAC common shares or a combination of IAC common shares and the common shares of the spun-off businesses, in all cases with appropriate adjustments to the number of shares of common stock, and exercise prices in the case of options, underlying each such award to maintain pre- and post spin-off values. The total incremental compensation cost resulting from the modification was $20.7 million for employees that remained IAC employees following the Spin-Off. This cost will be recognized over the vesting period of the awards. For the years ended December 31, 2010 and 2009 and for the period from August 20, 2008 to December 31, 2008, $4.8 million, $8.5 million and $3.5 million, respectively, of this incremental compensation cost was recognized in the accompanying consolidated statement of operations.

The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended December 31, 2010, 2009 and 2008 related to stock-based compensation was $32.2 million, $26.8 million and $33.7 million, respectively.

As of December 31, 2010, there was $137.9 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards. This cost is expected to be recognized over a weighted average period of approximately 2.2 years.

	December 31, 2010

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(Shares and intrinsic value in thousands)
Outstanding at January 1, 2010		14,666		$	20.89
Granted		2,389			24.84
Exercised		(2,184	)		17.90
Forfeited		(729	)		18.86
Expired		(724	)		23.27

Outstanding at December 31, 2010		13,418		$	22.06		6.9	$	103,730

Options exercisable		6,069		$	24.17		5.7	$	39,670

The fair value of each stock option award is estimated on the grant date using the Black-Scholes option pricing model. Approximately 2.4 million, 0.9 million and 15.7 million stock options were granted by the Company during the years ended December 31, 2010, 2009 and 2008, respectively.

The Black-Scholes option pricing model incorporates various assumptions, including expected volatility and expected term. For purposes of this model, no dividends have been assumed. During 2010, expected stock price volatilities are estimated based on the Company's historical volatility. Prior to 2010, due to the lack of sufficient historical IAC stock price volatilities subsequent to the Spin-Off, expected stock price volatilities were estimated based on historical stock price volatilities of peer companies operating in the same industry sector as IAC. The risk-free interest rates are based on U.S. Treasury yields for notes with comparable terms as the awards, in effect at the grant date. The following are the weighted average assumptions used in the Black-Scholes option pricing model:

	Years Ended December 31,

	2010	2009	2008
Expected volatility	30%	59%	47%
Risk-free interest rate	2.4%	2.1%	2.6%
Expected term	5.6 years	4.9 years	4.4 years
Dividend yield	0	0	0

The weighted average fair value of stock options granted during the years ended December 31, 2010, 2009 and 2008 with exercise prices equal to the market prices of IAC's common stock on the date of grant was $6.38, $8.95 and $7.46, respectively. The weighted average exercise price and weighted average fair value of stock options granted during the years ended December 31, 2010 and 2008 with exercise prices greater than the market value of IAC's common stock on the date of grant were $32.00 and $11.05; and $22.69 and $6.48, respectively. There were no stock options issued during the year ended December 31, 2009 with exercise prices greater than the market value of IAC's common stock on the date of grant.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between IAC's closing stock price on the last trading day of 2010 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2010. This amount changes based on the fair market value of IAC's common stock. The total intrinsic value of stock options exercised during the years ended December 31, 2010, 2009 and 2008 was $16.4 million, $2.8 million and $7.6 million, respectively.

Cash received from stock option exercises and the related tax benefit realized for the years ended December 31, 2010, 2009 and 2008 were: $39.1 million and $8.6 million; $3.8 million and $0.8 million; and $8.5 million and $2.1 million, respectively.

The following table summarizes the information about stock options outstanding and exercisable as of December 31, 2010:

	Options Outstanding						Options Exercisable

Range of Exercise Prices	Outstanding at December 31, 2010		Weighted- Average Remaining Contractual Life in Years		Weighted- Average Exercise Price		Exercisable at December 31, 2010		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
	(Shares in thousands)
$0.01 to $10.00		71		1.4	$	6.37		71		1.4	$	6.37
$10.01 to $20.00		5,446		7.2		16.41		2,163		6.8		16.21
$20.01 to $30.00		5,192		7.2		21.92		1,876		5.8		22.82
$30.01 to $40.00		2,008		6.5		31.42		1,258		4.4		31.07
$40.01 to $50.00		701		4.4		41.80		701		4.4		41.80

		13,418		6.9	$	22.06		6,069		5.7	$	24.17

RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of IAC common stock and with the value of each RSU equal to the fair value of IAC common stock at the date of grant. RSUs may be settled in cash, stock or both, as determined by the Committee at the time of grant. With the exception of awards to non-U.S. employees, which are settled in cash, all awards are settled in stock. Each RSU and PSU grant is subject to service-based vesting, where a specific period of continued employment must pass before an award vests. PSUs also include performance-based vesting, where certain performance targets set at the time of grant must be achieved before an award vests. The Company recognizes expense for all RSUs and PSUs for which vesting is considered probable. For RSU grants to U.S. employees, the expense is measured at the grant date as the fair value of IAC common stock and expensed as non-cash compensation over the vesting term. For PSU grants to U.S. employees, the expense is measured at the grant date as the fair value of IAC common stock and expensed as non-cash compensation over the vesting term if the performance targets are considered probable of being achieved.

The expense associated with RSU awards to non-U.S. employees is initially measured at fair value at the grant date and expensed over the vesting term, subject to mark-to-market adjustments for changes in the price of IAC common stock, as compensation expense within general and administrative expense. At December 31, 2010, 2009 and 2008, 0.1 million, less than 0.1 million and 0.1 million international awards were outstanding, respectively. Cash payments related to awards to international employees, including employees of businesses currently presented within discontinued operations, totaled $0.1 million, $0.3 million and $3.5 million for the years ended December 31, 2010, 2009 and 2008, respectively.

As of December 31, 2010, 2009 and 2008 there were no outstanding nonvested restricted stock awards. Nonvested RSUs and PSUs outstanding as of December 31, 2010 and changes during the year ended December 31, 2010 were as follows:

	RSUs					PSUs

	Number of shares			Weighted Average Grant Date Fair Value		Number of shares(a)			Weighted Average Grant Date Fair Value
	(Shares in thousands)
Nonvested at January 1, 2010		2,395		$	25.82		1,815		$	22.03
Granted		336			32.58		3,014			21.99
Vested		(1,065	)		28.98		—			—
Forfeited		(98	)		23.07		(931	)		23.99

Nonvested at December 31, 2010		1,568		$	24.78		3,898		$	21.52

(a): Included in the table are PSUs which cliff vest at the end of two or three years in varying amounts depending upon certain performance conditions. In all, depending on the award the number of shares vesting can range from 0% to 250% of the initial "target" award. The PSU table above includes these awards at their maximum.

The weighted average fair value of RSUs and PSUs granted during the years ended December 31, 2010, 2009 and 2008 based on market prices of IAC's common stock on the grant date was $23.05, $19.95 and $21.22, respectively. The total fair value of restricted stock, RSUs and PSUs that vested during the years ended December 31, 2010, 2009 and 2008 was $23.6 million, $5.3 million and $72.2 million, respectively.

IAC has granted phantom equity units and stock options in various operating subsidiaries to certain members of the subsidiaries' management. These equity awards vest over a period of years or upon the occurrence of certain prescribed events. In some cases, IAC has taken a preferred interest in the subsidiary with a face value equal to the subsidiary's acquisition price or, when funding a start-up business, its investment cost, or a certain other fixed amount. In some cases, these preferred interests accrete with paid-in-kind dividends at a prescribed rate of return. The value of the phantom equity units and stock options is tied to the value of the common stock of the entity, with the equity awards management receives as a whole generally representing a small minority of the total common stock outstanding. Accordingly, these interests only have value to the extent the relevant business appreciates in value above the preferred interest (including the accretion of dividends), our investment cost or other fixed amount or, in the case of stock options, the initial value utilized to determine the exercise price. These interests can have significant value in the event of significant appreciation. The interests are ultimately settled in IAC common stock or cash at the option of IAC, with fair market value determined by negotiation or arbitration, at various dates through 2015. The expense associated with these equity awards is initially measured at fair value at the grant date and is expensed as non-cash compensation over the vesting term. The aggregate number of IAC common shares that would be required to settle these interests at current estimated fair values, including vested and unvested interests, as of December 31, 2010 is 3.0 million shares, which is included in the calculation of diluted earnings per share if the effect is dilutive. The comparable amount as of December 31, 2009 was 2.0 million shares.