Vistaprint 2012 Annual Report Download - page 77

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73
Our 2005 Non-Employee Directors’ Share Option Plan provides for non-employee directors to receive share
option grants upon initial appointment as a director and annually thereafter in connection with our annual general
meeting of shareholders if they are continuing to serve as a director at such time.
We also have two additional plans with options and RSUs outstanding from which we will not grant any
additional awards. An aggregate of 3,833,226 ordinary shares are available for future awards under all of our share-
based award plans as of June 30, 2012. A combination of new shares and treasury shares has historically been
used in fulfillment of option exercises and RSU award vests.
Share options
We grant options to purchase ordinary shares at prices that are at least equal to the fair market value of the
shares on the date the option is granted and have a contractual term of eight to ten years. Options generally vest
quarterly over 3 years for non-employee directors and 25% after one year and quarterly thereafter for employees.
During the year ended June 30, 2012, we granted options to purchase an aggregate of 1,567,330 ordinary shares
to certain executives which will vest over 7 years. Of those awards, options to purchase 1,000,000 shares are
subject to market conditions that could result in $17,625 of compensation expense, excluding forfeitures, to be
recognized on an accelerated basis over the requisite service period.
The fair value of each option award subject only to service period vesting is estimated on the date of grant
using the Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the
requisite service period, net of estimated forfeitures based on historical experience. Use of a valuation model
requires management to make certain assumptions with respect to inputs. The expected volatility assumption is
based upon historical volatility of our share price. The expected term assumption is based on the contractual and
vesting term of the option and historical experience. The risk-free interest rate is based on the U.S. Treasury yield
curve with a maturity equal to the expected life assumed at the grant date. We value share options with a market
condition using a lattice model with compensation expense recorded on an accelerated basis over the requisite
service period.
Weighted-average values used for option grants in fiscal 2012, 2011 and 2010 were as follows:
Year Ended June 30,
2012 2011 2010
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04% 1.79% 2.03%
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —% —% —%
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 5.0 4.9
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58% 57% 57%
Weighted average fair value of options granted . . . . . . . . . . . . . . . . . $ 17.78 $ 24.47 $ 24.34
A summary of our share option activity and related information for the year ended June 30, 2012 is as
follows:
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value
Outstanding at the beginning of the period. . . . . . . . . 2,817,933 $ 24.63
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,583,470 49.86
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (91,794) 15.19
Forfeited/cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . (34,570) 44.32
Outstanding at the end of the period . . . . . . . . . . . . . 4,275,039 $ 34.02 5.8 $ 29,241
Vested or expected to vest at the end of the period . . 3,950,836 $ 32.72 5.6 $ 29,241
Exercisable at the end of the period . . . . . . . . . . . . . . 2,423,753 $ 22.19 4.1 $ 29,241
Form 10-K