Best Buy 2012 Annual Report Download - page 97

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$ in millions, except per share amounts or as otherwise noted
97
In fiscal 2012, 2011 and 2010, we estimated the fair value of each stock option on the date of grant using a lattice model with
the following assumptions:
Valuation Assumptions(1) 2012 2011 2010
Risk-free interest rate(2) 0.1% – 3.6% 0.2% – 3.9% 0.2% – 3.8%
Expected dividend yield 2.3% 1.5% 1.6%
Expected stock price volatility(3) 37% 36% 42%
Expected life of stock options (in years)(4) 6.2 6.1 6.1
(1) Forfeitures are estimated using historical experience and projected employee turnover.
(2) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options.
(3) We use an outside valuation advisor to assist us in projecting expected stock price volatility. We consider both the historical volatility of our stock price as
well as implied volatilities from exchange-traded options on our stock.
(4) We estimate the expected life of stock options based upon historical experience.
Market-Based Share Awards
The fair value of market-based share awards is determined based on generally accepted valuation techniques and the closing
market price of our stock on the date of grant. A summary of the status of our nonvested market-based share awards at March 3,
2012, and changes during fiscal 2012, is as follows:
Market-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at February 26, 2011 193,000 $ 52.19
Granted — —
Vested — —
Forfeited/Canceled (193,000) 52.19
Outstanding at March 3, 2012 — $ —
We recognize expense for market-based share awards on a straight-line basis over the requisite service period (or to an
employee's eligible retirement date, if earlier). At March 3, 2012, compensation expense had been fully recognized.
Performance-Based Share Awards
The fair value of performance-based share awards is determined based on the closing market price of our stock on the date of
grant. A summary of the status of our nonvested performance-based share awards at March 3, 2012, and changes during fiscal
2012, is as follows:
Performance-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at February 26, 2011 2,179,000 $ 41.64
Granted — —
Vested (2,000) 44.94
Forfeited/Canceled (1,265,000) 41.96
Outstanding at March 3, 2012 912,000 $ 41.20
At March 3, 2012, there was no compensation expense related to nonvested performance-based share awards that we expect to
recognize.