Spirit Airlines 2013 Annual Report Download - page 73

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Notes to Financial Statements—(Continued)
73
The grant date fair value of the performance share awards was determined through the use of a Monte Carlo simulation
model, which utilizes multiple input variables that determine the probability of satisfying the market condition requirements
applicable to each award as follows:
Weighted-Average
at Grant Date for
Year Ended
December 31, 2013
Weighted-Average
at Grant Date for
Year Ended
December 31, 2012
Expected volatility factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.41 0.39
Risk free interest rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.33 % 0.44 %
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.65 2.72
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — %
The volatility was based upon a weighted average of the volatility for the Company and the most recent volatility of the
peer group. The peer group used to calculate volatility is consistent with the group used for the traditional employee stock
options. The Company chose to use historical volatility to value these awards because historical stock prices were used to
develop the correlation coefficients between the Company and each of the peer companies within the peer group in order to
model stock price movements. The volatilities used were calculated as the remaining term of the performance period at the date
of grant. The risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues with
remaining terms equivalent to the remaining performance period. The Company does not intend to pay dividends on its
common stock in the foreseeable future. Accordingly, the Company used a dividend yield of zero in its model.
The following table summarizes the Company’s performance share awards for the year ended December 31, 2013:
Number of
Awards
Weighted-Average
Fair Value at Grant
Date ($)
Outstanding at December 31, 2012. . . . . . . . . . . . . . . . . 280,907 20.30
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,147 28.09
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,950) 21.76
Outstanding at December 31, 2013. . . . . . . . . . . . . . . . . 327,104 22.94
As of December 31, 2013 and December 31, 2012, there was $6.5 million and $6.9 million, respectively, of total
unrecognized compensation cost related to performance share awards expected to be recognized over 1.54 years and 2.0 years,
respectively.