Abercrombie & Fitch 2014 Annual Report Download - page 54

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ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
54
The grant date fair value of stock options that vested was insignificant during Fiscal 2014 and Fiscal 2013, and was $1.3 million
during Fiscal 2012.
As of January 31, 2015, all compensation cost related to currently outstanding stock options had been fully recognized.
Stock Appreciation Rights
The following table summarizes stock appreciation rights activity for Fiscal 2014:
Number of
Underlying
Shares
Weighted-
Average
Exercise Price Aggregate
Intrinsic Value
Weighted-
Average
Remaining
Contractual Life
Outstanding at February 1, 2014 8,982,959 $ 40.76
Granted 512,216 36.31
Exercised (92,475) 26.92
Forfeited or expired (449,025) 48.03
Outstanding at January 31, 2015 8,953,675 $ 40.28 $ 5,099,000 2.6
Stock appreciation rights exercisable at January 31, 2015 8,152,634 $ 40.17 $ 5,099,000 2.0
Stock appreciation rights expected to become exercisable in the future as
of January 31, 2015 739,920 $ 41.69 $ — 8.6
The Company estimates the fair value of stock appreciation rights using the Black-Scholes option-pricing model, which requires
the Company to estimate the expected term of the stock appreciation rights and expected future stock price volatility over the
expected term. Estimates of expected terms, which represent the expected periods of time the Company believes stock appreciation
rights will be outstanding, are based on historical experience. Estimates of expected future stock price volatility are based on the
volatility of the Company's Common Stock price for the most recent historical period equal to the expected term of the stock
appreciation right, as appropriate. The Company calculates the volatility as the annualized standard deviation of the differences
in the natural logarithms of the weekly stock closing price, adjusted for stock splits and dividends. The weighted-average
assumptions used in the Black-Scholes option-pricing model for stock appreciation rights granted during Fiscal 2014, Fiscal 2013
and Fiscal 2012 were as follows:
Executive Officers All Other Associates
2014 2013 2012 2014 2013 2012
Grant date market price $ 35.08 $ 46.57 $ 52.89 $ 37.05 $ 43.86 $ 51.31
Exercise price $ 35.49 $ 46.57 $ 52.89 $ 37.22 $ 43.86 $ 51.31
Fair value $ 12.85 $ 20.34 $ 23.53 $ 12.92 $ 16.17 $ 21.90
Assumptions:
Price volatility 49% 61% 56% 50% 53% 61%
Expected term (years) 4.9 4.7 5.0 4.1 4.1 4.1
Risk-free interest rate 1.6% 0.7% 1.3% 1.4% 0.7% 0.9%
Dividend yield 2.0% 1.8% 1.1% 1.9% 1.8% 1.2%
Compensation expense for stock appreciation rights is recognized on a straight-line basis over the awards' requisite service period,
net of forfeitures. As of January 31, 2015, there was $8.0 million of total unrecognized compensation cost, net of estimated
forfeitures, related to stock appreciation rights. The unrecognized compensation cost is expected to be recognized over a weighted-
average period of 16 months.
The total intrinsic value of stock appreciation rights exercised during Fiscal 2014, Fiscal 2013 and Fiscal 2012 was $1.5 million,
$8.5 million and $0.9 million, respectively. The grant date fair value of stock appreciation rights that vested during Fiscal 2014,
Fiscal 2013 and Fiscal 2012 was $7.4 million, $83.7 million and $24.1 million, respectively.