Lumber Liquidators 2013 Annual Report Download - page 65

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Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
NOTE 7. STOCK-BASED COMPENSATION − (continued)
As of December 31, 2013, total unrecognized compensation cost related to unvested options was
approximately $7,577, net of estimated forfeitures, which is expected to be recognized over a weighted
average period of approximately 2.7 years.
The fair value of each stock option award is estimated by management on the date of the grant using the
Black-Scholes-Merton option pricing model. The weighted average fair value of options granted during 2013,
2012 and 2011 was $29.66, $12.68 and $12.57, respectively.
The following are the ranges of assumptions for the periods noted:
Year Ended December 31,
2013 2012 2011
Expected dividend rate ................ 0% 0% 0%
Expected stock price volatility ........... 45% 45% 45%
Risk-free interest rate ................. 1.3−2.0% 1.0 − 1.6% 1.7 − 3.0%
Expected term of options ............... 6.0−7.5years 6.5 − 7.5 years 7.5 years
The expected stock price volatility range is based on a combination of historical volatility of the
Company’s stock price and the historical volatilities of companies included in a peer group that was selected
by management whose shares or options are publicly available. The volatilities are estimated for a period of
time equal to the expected term of the related option. The risk-free interest rate is based on the implied yield
of U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options
represents the estimated period of time until exercise and is determined by considering the contractual terms,
vesting schedule and expectations of future employee behavior.
Restricted Stock Awards
The following table summarizes activity related to restricted stock awards:
Shares
Weighted
Average Grant
Date Fair
Value
Nonvested, December 31, 2010 .......................... 142,081 $13.60
Granted ......................................... 79,236 23.28
Released ........................................ (56,529) 21.45
Forfeited ........................................ (22,668) 18.61
Nonvested, December 31, 2011 .......................... 142,120 $15.08
Granted ......................................... 66,425 27.62
Released ........................................ (43,529) 29.41
Forfeited ........................................ (12,611) 21.58
Nonvested, December 31, 2012 .......................... 152,405 $15.19
Granted ......................................... 80,814 66.11
Released ........................................ (38,362) 75.73
Forfeited ........................................ (16,522) 37.51
Nonvested, December 31, 2013 .......................... 178,335 $22.82
The fair value of restricted stock awards released during the years ended December 31, 2013, 2012 and
2011 was $3,060, $1,391 and $1,212, respectively. As of December 31, 2013, total unrecognized
compensation cost related to unvested restricted stock awards was approximately $2,735, net of estimated
forfeitures, which is expected to be recognized over a weighted average period of approximately 2.3 years.
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