Bed, Bath and Beyond 2015 Annual Report Download - page 98

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(1) Forfeitures are estimated based on historical experience.
(2) The expected life of stock options is estimated based on historical experience.
(3) Expected volatility is based on the average of historical and implied volatility. The historical volatility is
determined by observing actual prices of the Company’s stock over a period commensurate with the
expected life of the awards. The implied volatility represents the implied volatility of the Company’s call
options, which are actively traded on multiple exchanges, had remaining maturities in excess of twelve
months, had market prices close to the exercise prices of the employee stock options and were measured on
the stock option grant date.
(4) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of
the stock options.
Changes in the Company’s stock options for the fiscal year ended February 27, 2016 were as follows:
(Shares in thousands) Number of Stock Options
Weighted Average
Exercise Price
Options outstanding, beginning of period 3,682 $51.05
Granted 501 70.96
Exercised (255) 35.10
Forfeited or expired (90) 63.12
Options outstanding, end of period 3,838 $54.43
Options exercisable, end of period 2,358 $47.06
The weighted average fair value for the stock options granted in fiscal 2015, 2014 and 2013 was $23.12, $20.96
and $22.28, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for
options outstanding as of February 27, 2016 was 3.7 years and $19.9 million, respectively. The weighted average
remaining contractual term and the aggregate intrinsic value for options exercisable as of February 27, 2016 was
2.4 years and $18.9 million, respectively. The total intrinsic value for stock options exercised during fiscal 2015,
2014 and 2013 was $8.7 million, $33.5 million and $44.6 million, respectively.
Net cash proceeds from the exercise of stock options for fiscal 2015 were $9.1 million and the net associated
income tax benefit was $10.0 million.
Restricted Stock
Restricted stock awards are issued and measured at fair market value on the date of grant and generally become
vested in five equal annual installments beginning one to three years from the date of grant, subject, in general, to
the recipient remaining in the Company’s service on specified vesting dates. Vesting of restricted stock awarded
to certain of the Company’s executives is dependent on the Company’s achievement of a performance-based test
for the fiscal year of grant and, assuming achievement of the performance-based test, time vesting, subject, in
general, to the executive remaining in the Company’s service on specified vesting dates. The Company
recognizes compensation expense related to these awards based on the assumption that the performance-based
test will be achieved. Vesting of restricted stock awarded to the Company’s other employees is based solely on
time vesting. As of February 27, 2016, unrecognized compensation expense related to the unvested portion of the
Company’s restricted stock awards was $127.6 million, which is expected to be recognized over a weighted
average period of 3.6 years.
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