Pep Boys 2014 Annual Report Download - page 69

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 31, 2015, February 1, 2014 and February 2, 2013
NOTE 15—EQUITY COMPENSATION PLANS (Continued)
The following table summarizes information about PSUs and RSUs, in the aggregate, during the
last three fiscal years:
(dollar amounts in thousands) Fiscal 2014 Fiscal 2013 Fiscal 2012
Weighted average fair value at grant date per unit $ 8.03 $12.23 $9.48
Fair value at vesting date .................. $1,463 $ 758 $ 768
Intrinsic value at conversion date ............. $ 188 $ 525 $218
Tax benefits realized from conversions ......... $ 71 $ 197 $ 82
At January 31, 2015, there was approximately $3.0 million of total unrecognized pre-tax
compensation cost related to non-vested PSUs and RSUs, in the aggregate, which is expected to be
recognized over a weighted-average period of 1.2 years.
The Company recognized approximately $1.2 million, $1.2 million, and $1.1 million of
compensation expense related to stock options, and approximately $1.1 million, $1.8 million, and
$0.2 million of compensation expense related to PSUs and RSUs in the aggregate, included in selling,
general and administrative expenses for fiscal 2014, 2013, and 2012, respectively. The related tax benefit
recognized was approximately $0.9 million, $1.1 million and $0.4 million for fiscal 2014, 2013, and 2012,
respectively.
Expected volatility is based on historical volatilities for a time period similar to that of the
expected term and the expected term of the options is based on actual experience. The risk-free rate is
based on the U.S. treasury yield curve for issues with a remaining term equal to the expected term.
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-
pricing model. The following are the weighted-average assumptions:
Year ended
January 31, February 1, February 2,
2015 2014 2013
Dividend yield .......................... 0% 0% 0%
Expected volatility ....................... 41% 53% 58%
Risk-free interest rate range:
High................................. 1.5% 0.7% 0.6%
Low ................................. 0.1% 0.7% 0.5%
Ranges of expected lives in years ............ 1 - 5 4 - 5 4 - 5
The Company granted approximately 155,000 and 109,000 PSUs in fiscal 2014 and 2013,
respectively that will vest if the employees remain continuously employed through the third anniversary
date of the grant and the Company achieves a return on invested capital target for fiscal years 2016
and 2015, respectively. The number of underlying shares that may be issued upon vesting will range
from 0% to 150%, depending upon the Company achieving the financial targets in fiscal years 2016 and
2015, respectively. At the date of the grants, the fair values were $10.26 per unit and $11.85 per unit
for the 2014 and 2013 awards, respectively. The Company also granted approximately 77,000 and 55,000
PSUs for fiscal 2014 and 2013, respectively, that will vest if the employees remain continuously
employed through the third anniversary date of the grant and will become exercisable if the Company
satisfies a total shareholder return target in fiscal 2016 and 2015, respectively. The number of
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