AutoNation 2015 Annual Report Download - page 80

Table of Contents
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The following table presents a summary of shares of common stock issued in connection with grants of restricted stock and shares surrendered to
AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock (in actual number of shares):
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Shares issued 159,442
154,540
137,144
Shares surrendered to AutoNation to satisfy tax withholding obligations in
connection with the vesting of restricted stock 36,712
46,752
44,738
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The AutoNation, Inc. 2008 Equity and Incentive Plan (the “2008 Plan”) provides for the grant of stock options, stock appreciation rights, restricted stock,
restricted stock units, and other stock-based and cash-based awards to employees. A maximum of 12.0 million shares may be issued under the 2008 Plan,
provided that no more than 2.0 million shares may be issued pursuant to the grant of awards, other than options or stock appreciation rights, that are settled in
shares. The exercise price of all stock options granted in 2015 under the 2008 Plan, is equal to the closing price of our common stock on the date such awards
were granted.
The AutoNation, Inc. 2014 Non-Employee Director Equity Plan (the “2014 Director Plan”) provides for the grant of stock options, restricted stock,
restricted stock units, stock appreciation rights, and other stock-based awards to our non-employee directors. A maximum of 1.0 million shares may be issued
under the 2014 Director Plan. Additionally, no director may be granted awards in any calendar year with an aggregate grant date fair market value
(determined, with respect to options and stock appreciation rights, based on a Black-Scholes or other option valuation methodology approved by the
Compensation Committee) in excess of $750,000 per director.
Stock Options
In 2015, the Compensation Committee of our Board of Directors approved the grant of 1.0 million employee stock options. Generally, employee stock
option awards are granted quarterly on the first trading day of each of March, June, September, and December. The options granted in 2015 have an exercise
price equal to the closing price per share on the grant date ($62.60 on March 2, $62.93 on June 1, $58.08 on September 1, and $64.48 on December 1, 2015).
Stock options granted under all plans are non-qualified. Upon exercise, shares of common stock are issued from our treasury stock. Employee stock
options generally have a term of 10 years from the first date of grant (i.e., employee stock options granted in 2015 will expire on March 2, 2025) and vest in
equal installments over four years commencing on June 1 of the year following the grant date (e.g., 25% of each option grant made in 2015 will vest on
June 1, 2016).
We use the Black-Scholes valuation model to determine compensation expense and amortize compensation expense on a straight-line basis, net of
estimated forfeitures, over the requisite service period of the grants. Certain of our equity-based compensation plans contain provisions that provide for
vesting of awards upon retirement. Accordingly, compensation cost is recognized over the shorter of the stated vesting period or the period until employees
become retirement-eligible.
The following table summarizes the assumptions used related to the valuation of our stock options during 2015, 2014, and 2013:
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Risk-free interest rate 0.76% - 1.86%
1.11% - 2.04%
0.58% - 2.24%
Expected dividend yield —
—
—
Expected term 2 - 7 years
4 - 7 years
4 - 7 years
Expected volatility 24% - 34%
25% - 36%
29% - 44%
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