Hasbro 2014 Annual Report Download - page 94

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
include the volatility and fair value of the underlying company which are considered unobservable inputs as they
reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset
or liability. The Company believed that this is the best information available for use in the fair value
measurement. There were no changes in these valuation techniques during 2014.
The following is a reconciliation of the beginning and ending balances of the fair value measurements of the
Company’s financial instruments which use significant unobservable inputs (Level 3):
2014 2013
Balance at beginning of year ......................................... $ 5,484 7,618
Issuance of option agreement ......................................... (25,590) —
Sales ............................................................ — (990)
Net gain (loss) from change in fair value ................................ 553 (1,144)
Balance at end of year .............................................. $(19,553) 5,484
(13) Stock Options, Other Stock Awards and Warrants
Hasbro has reserved 12,801 shares of its common stock for issuance upon exercise of options and other
awards granted or to be granted under stock incentive plans for employees and for non-employee members of the
Board of Directors (collectively, the “plans”). These awards generally vest and are expensed in equal annual
amounts over three to five years. The plans provide that options be granted at exercise prices not less than the
market value of the underlying common stock on the date the option is granted and options are adjusted for such
changes as stock splits and stock dividends. Options are exercisable for periods of no more than seven years after
date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the
case of performance based contingent stock and restricted stock unit grants, shares are issued out of available
treasury shares. The Company’s current plan permits the granting of awards in the form of stock, stock
appreciation rights, stock awards and cash awards in addition to stock options.
Total compensation expense related to stock options, restricted stock units, including those awards made to
non-employee members of its Board of Directors, and stock performance awards for the years ended
December 28, 2014, December 29, 2013 and December 30, 2012 was $36,152, $21,272 and $19,434,
respectively, and was recorded as follows:
2014 2013 2012
Cost of sales .............................................. $ 395 152 146
Product development ....................................... 3,874 1,767 1,854
Selling, distribution and administration ......................... 31,883 19,353 17,434
36,152 21,272 19,434
Income tax benefit ......................................... 11,745 7,065 6,392
$24,407 14,207 13,042
Restricted Stock Units
The Company on occasion will issue restricted stock or grant restricted stock units to certain key employees.
These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These
awards are valued at the market value of the underlying common stock at the date of grant and are subsequently
amortized over the periods during which the restrictions lapse, generally between three and five years. During
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