Banana Republic 2014 Annual Report Download - page 70

58
At the end of each reporting period, we evaluate the probability that the Performance Shares will vest. We record
share-based compensation expense on an accelerated basis based on the grant-date fair value and the
probability that the pre-determined financial target will be achieved.
A summary of Stock Unit activity under the 2011 Plan for fiscal 2014 is as follows:
Shares
Weighted-Average
Grant-Date
Fair Value
Balance as of February 1, 2014 8,660,635 $ 28.25
Granted 1,994,936 $ 39.88
Granted, with vesting subject to performance conditions 1,314,252 $ 40.67
Vested (4,305,360) $ 26.47
Forfeited (2,017,985) $ 38.28
Balance as of January 31, 2015 5,646,478 $ 33.02
A summary of additional information about Stock Units is as follows:
Fiscal Year
2014 2013 2012
Weighted-average fair value per share of Stock Units granted $ 40.20 $ 36.15 $ 24.95
Grant-date fair value of Stock Units vested (in millions) $ 114 $ 63 $ 50
The aggregate intrinsic value of unvested Stock Units as of January 31, 2015 was $233 million.
As of January 31, 2015, there was $77 million (before any related tax benefit) of unrecognized share-based
compensation, adjusted for estimated forfeitures, related to unvested Stock Units, which is expected to be
recognized over a weighted-average period of 1.46 years. Total unrecognized share-based compensation may be
adjusted for future changes in estimated forfeitures.
Stock Units Granted Based on Performance Metrics
Under the 2011 Plan, some Stock Units are granted to certain employees only after the achievement of pre-
determined performance metrics. Once the Stock Unit is granted, vesting is then subject to continued service by
the employee, and expense is recognized over a period of three years on an accelerated basis.
At the end of each reporting period, we evaluate the probability that Stock Units will be granted. We record share-
based compensation expense based on the probability that the performance metrics will be achieved, with an
offsetting increase to current liabilities. We revalue the liability at the end of each reporting period and record an
adjustment to share-based compensation expense as required, based on the probability that the performance
metrics will be achieved. Upon achievement of the performance metrics, a Stock Unit is granted. At that time, the
associated liability is reclassified to stockholders’ equity.
Out of 1,994,936 Stock Units granted in fiscal 2014, 214,043 Stock Units were granted based on satisfaction of
performance metrics.
The liability related to potential Stock Units based on performance metrics, which is recorded in accrued
expenses and other current liabilities in the Consolidated Balance Sheets, was $1 million and $2 million as of
January 31, 2015 and February 1, 2014, respectively.
Stock Options
We have stock options outstanding under the 2011 Plan and the 2002 Plan. Stock options generally expire 10
years from the grant date, three months after employee termination, or one year after the date of an employee’s
retirement or death, if earlier. Vesting generally occurs over a period of four years of continued service by the
employee, with 25 percent vesting on each of the four anniversary dates.