Comfort Inn 2014 Annual Report Download - page 99

Table of Contents
Stock Options
The Company granted approximately 0.7 million, 0.2 million and 0.2 million options to certain employees of the Company at a fair value of
approximately $5.7 million, $1.7 million and $1.6 million during the years ended December 31, 2014, 2013 and 2012, respectively. The stock options
granted by the Company had an exercise price equal to the market price of the Company’s common stock on the date of grant. The fair value of the options
granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:



Risk-free interest rate 
0.73%
0.78%
Expected volatility 
38.14%
40.15%
Expected life of stock option 
4.5 years
4.4 years
Dividend yield 
2.01%
2.08%
Requisite service period 
4 years
4 years
Contractual life 
7 years
7 years
Weighted average fair value of options granted (per option)  
$ 9.89
$ 9.98
The expected term of the options and volatility are based on the historical data which is believed to be indicative of future exercise patterns and
volatility. Historical volatility is calculated based on a period that corresponds to the expected term of the stock option. The dividend yield and the risk-free
rate of return are calculated on the grant date based on the then current dividend rate and the risk-free rate for the period corresponding to the expected life of
the stock option. Compensation expense related to the fair value of these awards is recognized straight-line over the requisite service period based on those
awards that ultimately vest.
The aggregate intrinsic value of stock options outstanding and exercisable at December 31, 2014 was $43.7 million and $30.8 million respectively.
The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $10.1 million, $5.2 million and $2.8 million,
respectively.
The Company received $10.1 million, $8.9 million, and $7.1 million in proceeds from the exercise of 0.4 million, 0.3 million and 0.3 million employee
stock options during the years ended December 31, 2014, 2013 and 2012, respectively.
The following table summarizes information about stock options outstanding at December 31, 2014:




















$ 0.00 to $24.37 337,565
1.1 years
$ 20.57
337,565
$ 20.57
$24.38 to $29.25 591,074
2.4 years
$ 25.84
494,330
$ 25.61
$29.26 to $34.12 163,058
3.1 years
$ 31.31
122,288
$ 31.31
$34.13 to $39.00 163,975
5.1 years
$ 36.76
40,990
$ 36.76
$43.88 to $48.75 647,505
6.2 years
45.59
—
—
1,903,177
3.8 years
$ 33.03
995,173
$ 25.06
Special Dividend Adjustment
The Company's long-term incentive plans ("the Plans") contain provisions which require the automatic adjustment of
outstanding share-based awards in the event that the Company makes any changes to its capital structure, such as special
dividends, stock splits or spin-offs, if such changes result in the dilution or enlargement of the benefits or potential benefits
intended upon the grant of the award. The Company's board of directors concluded that the Special Cash Dividend paid on
August 23, 2012 would result in the dilution of the value of the Company's outstanding stock options. Therefore, in accordance
with the anti-dilution provision of the Plans, the Company's outstanding stock options were automatically adjusted to maintain their pre-dividend value. The
Company elected to maintain the pre-dividend value of the outstanding options by adjusting both the exercise price and the number of stock options
outstanding as of the ex-dividend date of the Special Dividend so that the
aggregate difference between the market price and exercise price multiplied by the number of shares issuable upon exercise
98