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68 2014 Form 10-K | H&R Block, Inc.
The following assumptions were used to value options during the periods:
Year ended April 30, 2014 2013 2012
Options - management and director:
Expected volatility 30.89% - 31.57% 29.69% - 31.43% 31.75% - 32.34%
Expected term 4 years 4 - 5 years 5 years
Dividend yield 2.77% - 2.87% 4.18% - 5.21% 3.43% - 4.80%
Risk-free interest rate 1.06% - 1.31% 0.61% - 0.75% 0.79% - 1.95%
Weighted-average fair value $ 5.57 $ 2.79 $ 3.31
OTHER AWARDS – A summary of nonvested shares, nonvested share units and deferred stock units, including those
that are performance-based, for the year ended April 30, 2014, is as follows:
(shares in 000s)
Nonvested Shares and
Nonvested Share Units Performance-Based
Nonvested Share Units
Shares
Weighted-
Average
Grant Date
Fair Value Shares
Weighted-
Average
Grant Date
Fair Value
Outstanding, beginning of the year 1,806 $ 14.64 658 $ 16.89
Granted 488 27.69 390 28.59
Released (578) 14.89 — —
Forfeited (149) 17.74 (82) 21.82
Outstanding, end of the year 1,567 $ 18.23 966 $ 20.98
The total fair value of shares and units vesting during fiscal years 2014, 2013 and 2012 was $8.6 million, $7.2 million
and $11.9 million, respectively. As of April 30, 2014, we had $23.5 million of total unrecognized compensation cost
related to these shares. This cost is expected to be recognized over a weighted-average period of two years.
When valuing our performance-based nonvested share units on the grant date, we typically estimate the expected
volatility using historical volatility for H&R Block, Inc. and selected comparable companies. The dividend yield is
calculated based on the current dividend and the market price of our common stock on the grant date. The risk-free
interest rate is based on the U.S. Treasury zero-coupon yield curve in effect on the grant date. Both expected volatility
and the risk-free interest rate are based on a period that approximates the expected term. The following assumptions
were used to value performance-based nonvested share units using the Monte Carlo valuation model during the
periods:
Year ended April 30, 2014 2013 2012
Expected volatility 11.75% – 70.17% 12.61% – 71.96% 20.68% – 143.12%
Expected term 3 years 3 years 3 years
Dividend yield (1) 0% – 2.88% 0% – 5.01% —%
Risk-free interest rate 0.61% 0.40% 0.75%
Weighted-average fair value $ 28.59 $ 16.72 $ 17.46
(1) The valuation model assumes that dividends are reinvested by the Company on a continuous basis.