WeightWatchers 2015 Annual Report Download - page 99

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
From time to time, the Company has granted fully-vested shares of its common stock to individuals in
connection with special circumstances. In fiscal 2015, the Company granted an aggregate of 105 fully-vested
shares of its common stock to individuals under such special circumstances.
Under the Winfrey Option Agreement, the Company granted Ms. Winfrey a fully vested non-qualified
option to purchase 3,513 shares of its common stock as more fully described in Note 3.
The Company issues common stock for share-based compensation awards from treasury stock. The total
compensation cost that has been charged against income for these plans and the Winfrey Option, as applicable,
was $24,771, $10,533, and $4,255 for the years ended January 2, 2016, January 3, 2015 and December 28, 2013,
respectively. Such amounts have been included as a component of selling, general and administrative expenses.
The total income tax benefit recognized in the income statement for all share-based compensation arrangements
was $8,170, $3,285, and $1,174 for the years ended January 2, 2016, January 3, 2015 and December 28, 2013,
respectively. The tax benefits realized from options exercised and RSUs vested totaled $274, $301, and $4,217
for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. No compensation
costs were capitalized. As of January 2, 2016, there was $19,600 of total unrecognized compensation cost related
to stock options and RSUs granted under the Stock Plans. That cost is expected to be recognized over a
weighted-average period of approximately 1.5 years.
While the Stock Plans permit various types of awards, other than the aforementioned shares issued to
directors and certain individuals in connection with special circumstances, grants under the plans have historically
been either non-qualified stock options or RSUs. In fiscal 2015, 2014 and 2013, the Company also granted special
performance-based stock option awards. The following describes some further details of these awards.
Stock Option Awards Under Stock Plans
Option Awards with Time Vesting Criteria
Pursuant to the option components of the Stock Plans, the Company’s Board of Directors authorized the
Company to enter into agreements under which certain employees received stock options with time vesting
criteria (“Time Vesting Options”). The options are exercisable based on the terms outlined in the agreements.
Time Vesting Options outstanding at January 2, 2016 and January 3, 2015 vest over a period of three to five
years and the expiration term is ten years. Time Vesting Options outstanding at January 2, 2016 and January 3,
2015 have an exercise price between $3.97 and $63.59 per share.
The fair value of each of these option awards is estimated on the date of grant using the Black-Scholes
option pricing model with the weighted average assumptions noted in the following table. Expected volatility is
based on the historical volatility of the Company’s stock. Since the Company’s option exercise history is limited,
it has estimated the expected term of these option grants to be the midpoint between the vesting period and the
contractual term of each award. The risk free interest rate is based on the U.S. Treasury yield curve in effect on
the date of grant which most closely corresponds to the expected term of the Time Vesting Options. The dividend
yield is based on our historic average dividend yield. The Company did not grant any Time Vesting Options in
fiscal 2014.
January 2,
2016
January 3,
2015
December 28,
2013
Dividend yield ................................ 0.0% 0.0% 0.8%
Volatility ..................................... 41.0% 0.0% 36.5%
Risk-free interest rate ........................... 1.84% - 1.89% 0% - 0% 1.3% - 2.2%
Expected term (years) ........................... 6.0 0.0 6.5
F-24