Albertsons 2012 Annual Report Download - page 68

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Stock Options
Stock options granted, exercised and outstanding consisted of the following:
Shares
Under Option
(In thousands)
Weighted
Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(In years)
Aggregate
Intrinsic Value
(In thousands)
Outstanding, February 26, 2011 22,004 $ 29.40
Granted — —
Exercised — —
Canceled and forfeited (3,591) 32.06
Outstanding, February 25, 2012 18,413 $ 28.90 2.62 $ —
Vested and expected to vest in future
as of February 25, 2012 18,243 $ 29.04 2.60 $ —
Exercisable as of February 25, 2012 15,475 $ 31.32 2.21 $ —
The Company did not grant any shares under stock options during fiscal 2012. The weighted average grant date
fair value of all stock options granted during fiscal 2011 and 2010 was $3.99 and $4.92 per share, respectively.
No stock options were exercised during fiscal 2012. The total intrinsic value of stock options exercised during
each of fiscal 2011 and 2010 was $1. Intrinsic value is measured using the fair market value as of the date of
exercise for stock options exercised and the fair market value as of February 25, 2012, less the applicable
exercise price.
The fair value of each stock option is estimated as of the date of grant using the Black-Scholes option pricing
model. Expected volatility is estimated based on an average of actual historical volatility and implied volatility
corresponding to the stock option’s estimated expected term. The Company believes this approach to determine
volatility is representative of future stock volatility. The expected term of a stock option is estimated based on
analysis of stock options already exercised and foreseeable trends or changes in behavior. The risk-free interest
rates are based on the U.S. Treasury securities maturities as of each applicable grant date. The dividend yield is
based on analysis of actual historical dividend yield.
The significant weighted average assumptions relating to the valuation of the Company’s stock options consisted
of the following:
2011 2010
Dividend yield 2.0% 2.0%
Volatility rate 42.8 – 50.2 % 38.4 – 42.2 %
Risk-free interest rate 1.1 – 1.8 % 1.8 – 2.8 %
Expected option life 4.0 – 5.4 years 4.0 – 5.4 years
64