Red Lobster 2014 Annual Report Download - page 53

Notes to Consolidated Financial Statements
Darden
2014 Annual Report 51
The following table presents a summary of our stock option activity as of and for the year ended May 25, 2014:
Weighted-Average Weighted-Average Aggregate
Options Exercise Price Remaining Intrinsic Value
(in millions) Per Share Contractual Life (Yrs) (in millions)
Outstanding beginning of period 11.6 $38.81 5.47 $162.6
Options granted 1.7 48.32
Options exercised (1.8) 28.57
Options canceled (0.3) 47.21
Outstanding end of period 11.2 $41.66 5.57 $ 91.0
Exercisable 6.5 $36.62 3.76 $ 84.6
The total intrinsic value of options exercised during fiscal 2014, 2013
and 2012 was $39.9 million, $47.1 million and $49.7 million, respectively.
Cash received from option exercises during fiscal 2014, 2013 and 2012 was
$50.9 million, $57.0 million and $62.9 million, respectively. Stock options
have a maximum contractual period of 10 years from the date of grant. We
settle employee stock option exercises with authorized but unissued shares
of Darden common stock or treasury shares we have acquired through our
ongoing share repurchase program.
As of May 25, 2014, there was $26.5 million of unrecognized
compensation cost related to unvested stock options granted under our
stock plans. This cost is expected to be recognized over a weighted-average
period of 2.1 years. The total fair value of stock options that vested during
fiscal 2014 was $20.5 million.
Restricted stock and RSUs are granted at a value equal to the market
price of our common stock on the date of grant. Restrictions lapse with
regard to restricted stock, and RSUs are settled in shares, at the end of their
vesting periods, which is generally four years.
The following table presents a summary of our restricted stock and RSU
activity as of and for the fiscal year ended May 25, 2014:
Weighted-Average
Shares Grant Date Fair
(in millions) Value Per Share
Outstanding beginning of period 0.2 $35.13
Shares granted 0.1 49.24
Shares vested (0.1) 35.12
Outstanding end of period 0.2 $39.04
As of May 25, 2014, there was $4.1 million of unrecognized
compensation cost related to unvested restricted stock and RSUs granted
under our stock plans. This cost is expected to be recognized over a
weighted-average period of 2.8 years. The total fair value of restricted stock
and RSUs that vested during fiscal 2014, 2013 and 2012 was $2.3 million,
$5.5 million and $10.0 million, respectively.
Darden stock units are granted at a value equal to the market price of
our common stock on the date of grant and will be settled in cash at the end
of their vesting periods, which range between four and five years, at the
then market price of our common stock. Compensation expense is measured
based on the market price of our common stock each period, is amortized
over the vesting period and the vested portion is carried as a liability on our
accompanying consolidated balance sheets. We also entered into equity for-
ward contracts to hedge the risk of changes in future cash flows associated
with the unvested, unrecognized Darden stock units granted (see Note 10 –
Derivative Instruments and Hedging Activities for additional information).
The following table presents a summary of our Darden stock unit activity
as of and for the fiscal year ended May 25, 2014:
Units Weighted-Average
(All units settled in cash) (in millions) Fair Value Per Unit
Outstanding beginning of period 2.2 $52.83
Units granted 0.6 49.11
Units vested (0.5) 48.87
Units canceled (0.2) 46.20
Outstanding end of period 2.1 $49.55
As of May 25, 2014, our total Darden stock unit liability was
$57.3 million, including $32.8 million recorded in other current liabilities and
$24.5 million recorded in other liabilities on our consolidated balance sheets.
As of May 26, 2013, our total Darden stock unit liability was $61.1 million,
including $19.9 million recorded in other current liabilities and $41.2 million
recorded in other liabilities on our consolidated balance sheets.
Based on the value of our common stock as of May 25, 2014, there
was $42.3 million of unrecognized compensation cost related to Darden
stock units granted under our incentive plans. This cost is expected to be
recognized over a weighted-average period of 2.9 years. The total fair value
of Darden stock units that vested during fiscal 2014 was $22.7 million.