Famous Footwear 2014 Annual Report Download - page 73

72 2014 BROWN SHOE COMPANY, INC. FORM 10-K
Performance Share Awards
Under the Company’s incentive compensation plans, common stock or cash may be awarded at the end of the performance
period at no cost to certain ocers and key employees if certain financial goals are met. Under the plan, employees are
granted performance share awards at a target number of shares or units, which vest generally over a three-year service period.
At the end of the three-year period, the employee will be given an amount of shares between 0% and 200% of the targeted
award, depending on the achievement of specified financial goals for the three-year period. If the awards are granted in units,
the employee will be given an amount of cash ranging from 0% to 200% of the equivalent market value of the targeted award.
Expense for performance share awards is recognized based upon the fair value of the awards on the date of grant and the
anticipated number of shares or cash to be awarded on a straight-line basis for each vesting portion of the stock award.
The fair value of the performance share awards is the quoted market price for the Company’s common stock on the date
of grant. The Company had nonvested outstanding performance share awards for 148,535 units at various target levels as
of January 31, 2015, which may result in the payment of up to 297,070 units at the end of the service periods.
The following table summarizes performance share activity for the year ended January 31, 2015:
Number of Number of
Nonvested Stock Nonvested Stock Weighted-Average
Performance Awards Performance Awards Grant Date
at Target Level at Maximum Level Fair Value
Nonvested at February 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . 164,525 329,050 $ 12.69
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,185 176,370 28.18
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84,275) (168,550) 9.27
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,900) (39,800) 15.96
Nonvested at January 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . 148,535 297,070 $ 23.39
The weighted-average grant-date fair value of performance share awards granted for 2014, 2013 and 2012 was $28.18,
$17.00 and $9.46, respectively. Performance share awards of 84,275, 117,250 and 140,000 vested in 2014, 2013 and 2012,
respectively. In addition to the units granted,$2.4 million of performance share awards were granted in cash during 2014.
As of January 31, 2015, the remaining unrecognized compensation cost related to nonvested performance share awards
was $9.3 million, which will be recognized over the weighted-average remaining service period of 1.4 years.
Stock Options
Stock options are granted to employees at exercise prices equal to the quoted market price of the Company’s stock at the
date of grant. Stock options generally vest over four years and have a term of 10 years. Compensation cost for all stock
options is recognized over the requisite service period for each award. No dividends are paid on unexercised options.
Expense for stock options is recognized on a straight-line basis separately for each vesting portion of the stock option award.
The Company granted no stock options in 2014 and 4,000 and 26,000 stock options during 2013 and 2012, respectively.
Fair values of options granted in 2013 and 2012 were estimated using the Black-Scholes option-pricing model based on
the following assumptions:
2013 2012
Dividend yield. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7% 3.1%
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.7% 66.5%
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3% 1.4%
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7
Dividend yields are based on historical dividend yields. Expected volatilities are based on historical volatilities of the
Company’s common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in eect at the time of
the grant for periods corresponding with the expected term of the options. The expected term of options represents the
weighted-average period of time that options granted are expected to be outstanding, giving consideration to vesting
schedules and the Company’s historical exercise patterns.
Summarized information about stock options outstanding and exercisable at January 31, 2015 is as follows:
Outstanding Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Number of Remaining Exercise Number of Exercise
Exercise Price Range Options Life (Years) Price Options Price
$3.33 - $11.54 . . . . . . . . . . . . . . . . . . . . . . . . . 82,725 5 $ 6.23 50,350 $ 6.71
$11.55 - $14.45. . . . . . . . . . . . . . . . . . . . . . . . . 66,000 5 13.95 66,000 13.95
$14.46 - $15.35 . . . . . . . . . . . . . . . . . . . . . . . . 101,110 1 15.00 96,860 14.99
$15.36 - $22.44 . . . . . . . . . . . . . . . . . . . . . . . . 91,221 1 20.94 91,221 20.94
$22.45 - $35.25 . . . . . . . . . . . . . . . . . . . . . . . . 75,747 2 33.50 75,747 33.50
416,803 3 $ 17.75 380,178 $ 18.83