Lumber Liquidators 2014 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2014 Lumber Liquidators annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 84

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84

Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
Note 6. Stock-Based Compensation − (continued)
Stock Options
The following table summarizes activity related to stock options:
Shares
Weighted
Average
Exercise
Price
Remaining
Average
Contractual
Term (Years)
Aggregate
Intrinsic
Value
Balance, December 31, 2011 ................ 2,194,347 $ 14.42 6.6 $12,746
Granted ............................ 182,281 25.73
Exercised ........................... (937,048) 11.16
Forfeited ............................ (128,203) 19.94
Balance, December 31, 2012 ................ 1,311,377 $ 17.79 6.5 $45,954
Granted ............................ 214,966 62.52
Exercised ........................... (718,665) 14.35
Forfeited ............................ (58,188) 29.04
Balance, December 31, 2013 ................ 749,490 $ 33.04 7.3 $52,358
Granted ............................ 79,126 100.05
Exercised ........................... (149,707) 21.04
Forfeited ............................ (26,101) 60.71
Balance, December 31, 2014 ................ 652,808 $ 42.81 6.9 $18,113
Exercisable at December 31, 2014 ............ 181,834 $ 22.90 5.3 $ 7,974
Vested and expected to vest, December 31, 2014 . . . 652,808 $ 42.81 6.9 $18,113
The aggregate intrinsic value is the difference between the exercise price and the closing price of the
Company’s common stock on December 31. The intrinsic value of the stock options exercised during 2014,
2013 and 2012 was $10,278, $49,137 and $22,881, respectively.
As of December 31, 2014, total unrecognized compensation cost related to unvested options was
approximately $6,487, net of estimated forfeitures, which is expected to be recognized over a weighted
average period of approximately 2.3 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 2014,
2013 and 2012 was $43.21, $29.66 and $12.68, respectively.
The following are the ranges of assumptions for the periods noted:
Year Ended December 31,
2014 2013 2012
Expected dividend rate ............. 0% 0% 0%
Expected stock price volatility ........ 45% 45% 45%
Risk-free interest rate .............. 1.8% 1.3 − 2.0% 1.0 − 1.6%
Expected term of options ............ 5.5years 6.0 − 7.5 years 6.5 − 7.5 years
The expected stock price volatility is based on the historical volatility of the Company’s stock price and
in 2013 and 2012, also included 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
58