CarMax 2016 Annual Report Download - page 68
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Stock Option Activity
Weighted
Weighted Average
Average Remaining Aggregate
Number of Exercise Contractual Intrinsic
(Shares and intrinsic value in thousands) Shares Price Life (Years) Value
Outstanding as of February 28, 2015 7,645 $ 35.59
Options granted 1,408 73.43
Options exercised (1,711) 27.49
Options forfeited or expired (20) 69.68
Outstanding as of February 29, 2016 7,322 $ 44.67 4.2 $ 49,575
Exercisable as of February 29, 2016 3,501 $ 35.02 3.2 $ 39,561
Stock Option Information
Years Ended February 29 or 28
2016 2015 2014
Options granted 1,408,427 2,056,789 1,605,149
Weighted average grant date fair value per share $ 20.53 $ 13.28 $ 15.59
Cash received from options exercised (in millions) $ 47.0 $ 89.8 $ 45.1
Intrinsic value of options exercised (in millions) $ 70.4 $ 153.3 $ 62.5
Realized tax benefits from exercises (in millions) $ 28.2 $ 61.7 $ 25.1
For stock options, the fair value of each award is estimated as of the date of grant using a binomial valuation model. In computing
the value of the option, the binomial model considers characteristics of fair-value option pricing that are not available for
consideration under a closed-form valuation model (for example, the Black-Scholes model), such as the contractual term of the
option, the probability that the option will be exercised prior to the end of its contractual life and the probability of termination or
retirement of the option holder. For this reason, we believe that the binomial model provides a fair value that is more representative
of actual experience and future expected experience than the value calculated using a closed-form model. Estimates of fair value
are not intended to predict actual future events or the value ultimately realized by the recipients of share-based awards.
Assumptions Used to Estimate Option Values
Years Ended February 29 or 28
2016 2015 2014
Dividend yield 0.0% 0.0% 0.0%
Expected volatility factor (1) 25.8% - 31.8% 25.2% - 32.7% 27.9% - 46.8%
Weighted average expected volatility 30.6% 31.8% 44.7%
Risk-free interest rate (2) —% - 2.1% 0.01% - 2.7% 0.02% - 2.6%
Expected term (in years) (3) 4.7 4.7 4.7
(1) Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the implied volatility
derived from the market prices of traded options on our stock.
(2) Based on the U.S. Treasury yield curve at the time of grant.
(3) Represents the estimated number of years that options will be outstanding prior to exercise.