Radio Shack 2013 Annual Report Download - page 56

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under this plan. At December 31, 2013, approximately
11,000 stock options were outstanding under this plan.
2001 Incentive Stock Plan (“2001 ISP”): The 2001
ISP permitted the grant of up to 9.2 million shares in
the form of ISOs and NQs. The 2001 ISP also
permitted directors to elect to receive shares in lieu of
cash payments for their annual retainer fees and board
and committee meeting fees. The 2001 ISP was
terminated in 2009 upon the shareholder approval of
the 2009 ISP and no further grants may be made
under this plan. At December 31, 2013, approximately
0.7 million stock options were outstanding under this
plan.
2009 Incentive Stock Plan (“2009 ISP”): The 2009
ISP permitted the grant of up to 11.0 million shares in
the form of ISOs, NQs, restricted stock, restricted stock
units, stock appreciation rights, or other stock-based
awards. The 2009 ISP also permitted directors to elect
to receive shares in lieu of cash payments for their
annual retainer fees and board and committee meeting
fees. Full-value awards granted under the 2009 ISP,
such as restricted stock and restricted stock units,
reduced the number of shares available for grant by
1.68 shares for each share or unit granted. Stock
options and stock appreciation rights reduced the
number of shares available for grant by one share for
each stock option or stock appreciation right granted.
This plan was terminated in 2013 upon the shareholder
approval of the 2013 Omnibus Incentive Plan and no
further grants may be made under this plan. As of
December 31, 2013, approximately 1.4 million stock
options and 1.4 million shares of unvested restricted
stock were outstanding under this plan.
2013 Omnibus Incentive Plan (“2013 Omnibus
Plan”): The 2013 Omnibus Plan permits the grant of
up to 16.7 million shares in the form of ISOs, NQs,
restricted stock, restricted stock units, stock
appreciation rights, or other stock-based awards. The
2013 Omnibus Plan also permits directors to elect to
receive shares in lieu of cash payments for their annual
retainer fees and board and committee meeting fees.
Full-value awards granted under the 2013 Omnibus
Plan, such as restricted stock and restricted stock
units, will reduce the number of shares available for
grant by 1.96 shares for each share or unit granted.
Stock options and stock appreciation rights will reduce
the number of shares available for grant by one share
for each stock option or stock appreciation right
granted. This plan expires on March 24, 2023. At
December 31, 2013, approximately 2.6 million stock
options and zero shares of unvested restricted stock
were outstanding under this plan, and up to 13.8
million shares were available for grants in the form of
stock options under this plan.
In 2013, we granted 2.5 million non-plan options to our
Chief Executive Officer as part of an inducement grant
related to the terms of his employment. These options vest
over 7 years from the date of grant and expire in 2020. An
additional market condition was attached to these non-plan
options that restrict exercise until a stock price hurdle has
been achieved. The market condition was not met in 2013.
Stock Options: The respective fair values of the stock
options granted during the years ended December 31,
2013, 2012 and 2011, were estimated using either the
Black-Scholes-Merton option-pricing model or a lattice
model. These option-pricing models require the use of
certain subjective assumptions. The following table lists the
assumptions used in calculating the fair value of stock
options granted during each year:
Valuation Assumptions
(1)
2013 2012 2011
Risk free interest rate
(2)
1.6 % 1.0 % 1.6 %
Expected dividend yield 0.0 % 4.9 % 2.0 %
Expected stock price volatility
(3)
57.1 % 55.4 % 43.0 %
Expected life of stock options
(in years)
(4)
6.5 5.5 5.4
(1) Forfeitures are estimated using historical experience and projected
employee turnover. Forfeitures were estimated to be zero for all periods
because of the low number of grant recipients.
(2) Based on the U.S. Treasury constant maturity interest rate whose term
is consistent with the expected life of our stock options.
(3) We consider both the historical volatility of our stock price, as well as
implied volatilities from exchange-traded options on our stock.
(4) We estimate the expected life of stock options based upon historical
experience.