Pottery Barn 2011 Annual Report Download - page 71

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The following table summarizes information about stock-settled stock appreciation rights outstanding at
January 29, 2012:
Stock-Settled
Stock Appreciation
Rights Outstanding
Stock-Settled Stock
Appreciation
Rights Vested
Range of Conversion Prices
Number
Outstanding
Weighted Average
Contractual Term
Remaining (Years)
Weighted
Average
Conversion
Price
Number
Vested
Weighted
Average
Conversion
Price
$ 8.01 – $ 8.31 35,300 6.90 $ 8.08 17,650 $ 8.08
$ 8.56 – $ 8.56 1,756,200 6.78 8.56 1,026,925 8.56
$ 24.25 – $ 39.22 784,057 6.73 30.59 357,034 31.30
$ 40.44 – $ 40.44 72,900 4.12 40.44 72,900 40.44
$ 40.87 – $ 40.87 1,293,185 6.18 40.87 0 0
$ 8.01 – $ 40.87 3,941,642 6.52 $24.13 1,474,509 $15.64
The fair value for both options and stock-settled stock appreciation rights is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted-average assumptions:
•Expected term – The expected term of the option awards represents the period of time between the grant
date of the option awards and the date the option awards are either exercised, converted or canceled,
including an estimate for those option awards still outstanding.
•Expected volatility – The expected volatility is based on an average of the historical volatility of our
stock price, for a period approximating our expected term, and the implied volatility of externally traded
options of our stock that were entered into during the period.
•Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at
the time of grant and with a maturity that approximates our expected term.
•Dividend yield – The dividend yield is based on our quarterly cash dividend and the anticipated dividend
payout over our expected term of the option awards.
The weighted average assumptions used for fiscal 2011, fiscal 2010 and fiscal 2009 are as follows:
Fiscal Year Ended
Jan. 29, 2012 Jan. 30, 2011 Jan. 31, 2010
Expected term (years) 5.0 5.1 5.1
Expected volatility 46.6% 47.3% 56.0%
Risk-free interest rate 2.2% 2.6% 2.4%
Dividend yield 2.3% 2.2% 2.3%
57
Form 10-K