Bed, Bath and Beyond 2015 Annual Report Download - page 97

12. STOCK-BASED COMPENSATION
The Company measures all employee stock-based compensation awards using a fair value method and records
such expense, net of estimated forfeitures, in its consolidated financial statements. Currently, the Company’s
stock-based compensation relates to restricted stock awards, stock options and performance stock units. The
Company’s restricted stock awards are considered nonvested share awards.
Stock-based compensation expense for the fiscal year ended February 27, 2016, February 28, 2015 and March 1,
2014 was approximately $67.0 million ($42.4 million after tax or $0.26 per diluted share), $66.5 million ($42.4
million after tax or $0.22 per diluted share) and approximately $56.2 million ($35.6 million after tax or $0.17 per
diluted share), respectively. In addition, the amount of stock-based compensation cost capitalized for the years
ended February 27, 2016 and February 28, 2015 was approximately $2.1 million and $1.9 million, respectively.
Incentive Compensation Plans
The Company currently grants awards under the Bed Bath & Beyond 2012 Incentive Compensation Plan (the
“2012 Plan”), which amended and restated the Bed Bath & Beyond 2004 Incentive Compensation Plan (the
“2004 Plan”). The 2012 Plan includes an aggregate of 43.2 million common shares authorized for issuance and
the ability to grant incentive stock options. Outstanding awards that were covered by the 2004 Plan continue to
be in effect under the 2012 Plan.
The 2012 Plan is a flexible compensation plan that enables the Company to offer incentive compensation through
stock options (whether nonqualified stock options or incentive stock options), restricted stock awards, stock
appreciation rights, performance awards and other stock based awards, including cash awards. Under the 2012
Plan, grants are determined by the Compensation Committee for those awards granted to executive officers and
by an appropriate committee for all other awards granted. Awards of stock options and restricted stock generally
vest in five equal annual installments beginning one to three years from the date of grant. Awards of performance
stock units generally vest over a period of four years from the date of grant dependent on the Company’s
achievement of performance-based tests and subject, in general, to the executive remaining in the Company’s
service on specified vesting dates.
The Company generally issues new shares for stock option exercises, restricted stock awards and vesting of
performance stock units.
Stock Options
Stock option grants are issued at fair market value on the date of grant and generally become exercisable in either
three or five equal annual installments beginning one year from the date of grant for options issued since May 10,
2010, and beginning one to three years from the date of grant for options issued prior to May 10, 2010, in each
case, subject, in general to the recipient remaining in the Company’s service on specified vesting dates. Option
grants expire eight years after the date of grant. All option grants are nonqualified. As of February 27, 2016,
unrecognized compensation expense related to the unvested portion of the Company’s stock options was $23.2
million, which is expected to be recognized over a weighted average period of 2.7 years.
The fair value of the stock options granted was estimated on the date of the grant using a Black-Scholes option-
pricing model that uses the assumptions noted in the following table.
FISCAL YEAR ENDED
Black-Scholes Valuation Assumptions (1)
February 27,
2016
February 28,
2015
March 1,
2014
Weighted Average Expected Life (in years) (2) 6.7 6.6 6.6
Weighted Average Expected Volatility (3) 27.59% 28.31% 29.27%
Weighted Average Risk Free Interest Rates (4) 1.93% 2.11% 1.11%
Expected Dividend Yield — — —
85