Cisco 2014 Annual Report Download - page 122

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The following table summarizes significant ranges of outstanding and exercisable stock options as of July 26, 2014 (in
millions, except years and share prices):
STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE
Range of Exercise Prices
Number
Outstanding
Weighted-
Average
Remaining
Contractual
Life
(in Years)
Weighted-
Average
Exercise
Price per
Share
Aggregate
Intrinsic
Value
Number
Exercisable
Weighted-
Average
Exercise
Price per
Share
Aggregate
Intrinsic
Value
$ 0.01 – 15.00 ......................... 8 5.2 $ 4.00 $172 4 $ 5.54 $ 85
15.01 – 18.00 ......................... 11 0.3 17.79 93 11 17.79 93
18.01 – 20.00 ......................... 3 0.7 19.38 20 3 19.38 20
20.01 – 25.00 ......................... 62 1.2 22.86 192 62 22.86 192
25.01 – 30.00 ......................... 27 1.9 26.59 4 27 26.59 4
30.01 – 35.00 ......................... 76 2.0 32.16 — 76 32.16 —
Total .............................. 187 1.7 $26.03 $481 183 $26.50 $394
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing
stock price of $25.97 as of July 25, 2014, that would have been received by the option holders had those option holders
exercised their stock options as of that date. The total number of in-the-money stock options exercisable as of July 26, 2014
was 94 million. As of July 27, 2013, 271 million outstanding stock options were exercisable and the weighted-average exercise
price was $24.84.
(g) Valuation of Employee Share-Based Awards
Time-based restricted stock units and performance-based restricted stock units (PRSUs) that are based on the Company’s
financial performance metrics or non-financial operating goals are valued using the market value of the Company’s common
stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, the Company estimated
the fair value of the total shareholder return (TSR) component of the PRSUs using a Monte Carlo simulation model. The
assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:
RESTRICTED STOCK UNITS
Years Ended July 26, 2014 July 27, 2013 July 28, 2012
Number of shares granted (in millions) .............................. 56 64 62
Grant date fair value per share ..................................... $20.61 $18.39 $17.26
Weighted-average assumptions/inputs:
Expected dividend yield ...................................... 3.1% 3.0% 1.5%
Range of risk-free interest rates ................................ 0.0% – 1.7% 0.0% – 1.1% 0.0% – 1.1%
PERFORMANCE RESTRICTED STOCK UNITS
Years Ended July 26, 2014 July 27, 2013 July 28, 2012
Number of shares granted (in millions) .............................. 742
Grant date fair value per share ..................................... $21.90 $19.73 $22.17
Weighted-average assumptions/inputs:
Expected dividend yield ...................................... 3.0% 2.9% 1.3%
Range of risk-free interest rates ................................ 0.0% – 1.7% 0.1% – 0.7% 0.0% – 0.9%
Range of expected volatilities for index .......................... 14.2% – 70.5% 18.3% – 78.3% 19.8% – 60.8%
The PRSUs granted during fiscal 2014, 2013, and 2012 are contingent on the achievement of the Company’s financial
performance metrics, its comparative market-based returns, or the achievement of non-financial operating goals. For the
awards based on financial performance metrics or its comparative market-based returns, generally 50% of the PRSUs are
earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each
fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on the
Company’s TSR measured against the benchmark TSR of a peer group over the same period. Each PRSU recipient could vest
in 0% to 150% of the target shares granted contingent on the achievement of the Company’s financial performance metrics or
its comparative market-based returns, and 0% or 100% of the target shares granted contingent on the achievement of non-
financial operating goals.
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