Best Buy 2013 Annual Report Download - page 96

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96
In fiscal 2013 (11-month), 2012 and 2011, we estimated the fair value of each stock option on the date of grant using a lattice or
Black Scholes (for certain individuals) valuation model with the following assumptions:
11-Month 12-Month
Valuation Assumptions(1) 2013 2012 2011
Risk-free interest rate(2) 0.1% – 2.0% 0.1% – 3.6% 0.2% – 3.9%
Expected dividend yield 2.2% 2.3% 1.5%
Expected stock price volatility(3) 44% 37% 36%
Expected life of stock options (in years)(4) 5.9 6.2 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
February 2, 2013, and changes during fiscal 2013 (11-month), is as follows:
Market-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at March 3, 2012 — $ —
Granted 879,000 16.92
Vested — —
Forfeited/Canceled (74,000) 18.63
Outstanding at February 2, 2013 805,000 $ 16.76
At February 2, 2013, there was $12 million of unrecognized compensation expense related to nonvested market-based share
awards that we expect to recognize over a weighted-average period of 2.7 years.
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 February 2, 2013, and changes during
fiscal 2013 (11-month), is as follows:
Performance-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at March 3, 2012 912,000 $ 41.20
Granted — —
Vested (2,000) 44.20
Canceled (908,000) 41.19
Outstanding at February 2, 2013 2,000 $ 44.20
At February 2, 2013, there was no compensation expense related to nonvested performance-based share awards that we expect
to recognize.
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