TJ Maxx 2009 Annual Report Download - page 82

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The fair value of options is estimated as of the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:
2010 2009 2008
Fiscal Year
Risk-free interest rate 2.49% 2.96% 4.00%
Dividend yield 1.3% 1.3% 1.2%
Expected volatility factor 37.3% 33.9% 31.0%
Expected option life in years 5.0 4.8 4.5
Weighted average fair value of options issued $12.27 $10.46 $8.38
Expected volatility is based on a combination of implied volatility from traded options on our stock, and historical
volatility during a term approximating the expected term of the option granted. We use historical data to estimate option
exercise, employee termination behavior and dividend yield within the valuation model. Employee groups and option
characteristics are considered separately for valuation purposes when applicable. No such distinctions existed during the
fiscal years presented. The expected option life represents an estimate of the period of time options are expected to
remain outstanding based upon historical exercise trends. The risk-free rate is for periods within the contractual life of the
option based on the U.S. Treasury yield curve in effect at the time of grant.
Stock Options: A summary of the status of TJX’s stock options and related Weighted Average Exercise Prices
(“WAEP”) is presented below (shares in thousands):
Options WAEP Options WAEP Options WAEP
January 30, 2010
Fiscal Year Ended
January 31, 2009 January 26, 2008
(53 weeks)
Outstanding at beginning of year 31,773 $24.83 35,153 $22.17 37,854 $20.50
Granted 4,877 37.74 5,199 35.02 5,716 29.23
Exercised and repurchased (8,012) 21.30 (7,533) 19.08 (7,473) 18.84
Forfeitures (663) 31.79 (1,046) 27.59 (944) 24.25
Outstanding at end of year 27,975 $27.92 31,773 $24.83 35,153 $22.17
Options exercisable at end of year 18,372 $24.01 21,664 $21.56 24,243 $19.88
Included in the exercised and repurchased amount in the table above are approximately 77,000 options that were
repurchased from optionees by TJX during fiscal 2009 and 341,000 options repurchased during fiscal 2008. There were
no such option repurchases during fiscal 2010. Cash paid for such repurchased options amounted to $659,305 in fiscal
2009 and $2.3 million in fiscal 2008. The total intrinsic value of options exercised was $109.2 million in fiscal 2010,
$108.1 million in fiscal 2009 and $79.7 million in fiscal 2008.
The following table summarizes information about stock options outstanding that were expected to vest and stock
options outstanding that were exercisable at January 30, 2010. Options outstanding expected to vest represents total
unvested options of 9.6 million adjusted for anticipated forfeitures.
In thousands except years and per share amounts Shares
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contract
Life
Weighted
Average
Exercise
Price
Options outstanding expected to vest 8,933 $ 24,048 8.9 years $35.32
Options exercisable 18,372 $282,172 5.3 years $24.01
Total outstanding options vested and expected to vest 27,305 $306,220 6.5 years $27.71
Performance-Based Restricted Stock and Other Awards: TJX has issued performance-based restricted stock
awards under the Stock Incentive Plan which are issued at no cost to the recipient of the award and have restrictions that
generally lapse over one to four years from date of grant when and if specified performance criteria are met. The grant
F-19