American Eagle Outfitters 2013 Annual Report Download - page 17

Table of Contents
Cash received from the exercise of stock options was $6.8 million for the 13 weeks ended May 3, 2014 and $1.5 million for the 13 weeks ended
May 4, 2013. The actual tax benefit realized from stock option exercises totaled ($0.7) million for the 13 weeks ended May 3, 2014 and $7.9
million for the 13 weeks ended May 4, 2013.
The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a
Black-Scholes option pricing model with the following weighted-average assumptions:
As of May 3, 2014, there was $0.5 million of unrecognized compensation expense related to non-vested time-based stock option awards that is
expected to be recognized over a weighted average period of 2.6 years.
Restricted Stock Grants
Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years. Time-based restricted
stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and
forfeiture provisions as the original award.
Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three year
period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock
units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions
and forfeiture provisions as the original award.
The grant date fair value of all restricted stock awards is based on the closing market price of the Company’
s common stock on the date of grant.
A summary of the Company’s restricted stock activity is presented in the following tables:
As of May 3, 2014, there was $28.0 million of unrecognized compensation expense related to non-vested time-
based restricted stock unit awards
that is expected to be recognized over a weighted-average period of 2.5 years. Based on current probable performance, there was $0.4 million of
unrecognized compensation expense related to performance-based restricted stock unit awards which will be recognized as achievement of
performance goals is probable over a one to three year period.
16
13 Weeks Ended
Black
-
Scholes Option Valuation Assumptions
May 3,
2014
May 4,
2013
Risk-free interest rate (1)
1.5%
0.3%
Dividend yield
3.1%
2.0%
Volatility factor (2)
41.2%
34.4%
Weighted
-
average expected term (3)
4.5 years
2.5 years
Expected forfeiture rate (4)
8.0%
8.0%
(1)
Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.
(2)
Based on a combination of historical volatility of the Company
’
s common stock and implied volatility.
(3)
Represents the period of time options are expected to be outstanding, based on historical experience.
(4)
Based upon historical experience.
Time
-
Based Restricted Stock Units
Performance
-
Based Restricted Stock Units
13 Weeks Ended
May 3, 2014
13 Weeks Ended
May 3, 2014
(Shares in thousands)
Shares
Weighted
-
Average Grant
Date Fair Value
Shares
Weighted
-
Average Grant
Date Fair Value
Nonvested
—February 1, 2014
1,155
$
20.13
2,395
$
16.85
Granted
1,357
$
14.45
1,225
$
14.41
Vested
(608
)
$
18.17
(604
)
$
15.33
Cancelled
(126
)
$
17.59
(17
)
$
22.50
Nonvested
—
May 3, 2014
1,778
$
16.65
2,999
$
16.13