Express 2014 Annual Report Download - page 66

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The Company’s activity with respect to stock options during 2014 was as follows:
Number of
Shares
Grant Date
Weighted Average
Exercise Price
Weighted-Average
Remaining Contractual
Life
Aggregate
Intrinsic
Value
(in thousands, except per share amounts and years)
Outstanding, February 1, 2014 . . . 3,234 $18.85
Granted ................. 388 $15.84
Exercised ................ — $ —
Forfeited or expired ....... (152) $20.10
Outstanding, January 31, 2015 . . . 3,470 $18.45 6.7 $97
Expected to vest at January 31,
2015 ..................... 1,132 $18.35 8.1 $47
Exercisable at January 31,
2015 ..................... 2,310 $18.52 6.1 $49
The following provides additional information regarding the Company’s stock options:
2014 2013 2012
(in thousands, except per share amounts)
Weighted average grant date fair value of options
granted .................................... $8.49 $ 9.50 $12.75
Total intrinsic value of options exercised ........... $— $1,001 $ 270
As of January 31, 2015, there was approximately $5.3 million of total unrecognized compensation expense
related to stock options, which is expected to be recognized over a weighted-average period of approximately 1.5
years.
The Company uses the Black-Scholes-Merton option-pricing model to value stock options granted to employees
and directors. The Company’s determination of the fair value of stock options is affected by the Company’s stock
price as well as a number of subjective and complex assumptions. These assumptions include the risk-free
interest rate, the Company’s expected stock price volatility over the term of the awards, expected term of the
award, and dividend yield.
The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing
model with the following weighted-average assumptions:
2014 2013 2012
Risk-free interest rate (1) .................................... 1.86% 1.14% 1.12%
Price Volatility (2) ......................................... 53.7% 55.9% 55.9%
Expected term (years) (3) ................................... 6.25 6.20 6.17
Dividend yield (4) ......................................... — — —
(1) Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock
options.
(2) For the first two years following the initial public offering of the Company’s common stock, this was based
on the historical volatility of selected comparable companies over a period consistent with the expected term
of the stock options because the Company had a limited history of being publicly traded. Comparable
companies were selected primarily based on industry, stage of life cycle, and size. Beginning with the
second anniversary of the IPO in May 2012, the Company began using its own volatility as an additional
input in the determination of expected volatility.
(3) Calculated utilizing the “simplified” methodology prescribed by SAB No. 107 due to the lack of historical
exercise data necessary to provide a reasonable basis upon which to estimate the term.
(4) The Company does not currently plan on paying regular dividends.
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