Lumber Liquidators 2015 Annual Report Download - page 75

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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)
stock upon the director’s departure from the Board. There were 95,553 and 63,279 deferred stock units
outstanding at December 31, 2015 and 2014, respectively.
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, 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
Granted ............................ 410,164 25.34
Exercised ........................... — 0.00
Forfeited ............................ (370,196) 44.71
Balance, December 31, 2015 ................ 692,776 $ 31.45 7.7 $ 1,283
Exercisable at December 31, 2015 ............ 221,561 $ 29.28 $ 540
Vested and expected to vest December 31, 2015 . . . 692,776 $ 31.45 $ 1,283
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 2015,
2014 and 2013 was nil, $10,278 and $49,137, respectively.
As of December 31, 2015, total unrecognized compensation cost related to unvested options was
approximately $4,570, net of estimated forfeitures, which is expected to be recognized over a weighted
average period of approximately 3.0 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 2015,
2014 and 2013 was $11.87, $43.21 and $29.66, respectively.
The following are the ranges of assumptions for the periods noted:
Year Ended December 31,
2015 2014 2013
Expected dividend rate ............. 0% 0% 0%
Expected stock price volatility ........ 50% 45% 45%
Risk-free interest rate .............. 1.7% 1.8% 1.3 − 2.0%
Expected term of options ............ 5.5years 5.5 years 6.0 − 7.5 years
The expected stock price volatility is based on the historical volatility of the Company’s stock price and
in 2013, 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
65