Barnes and Noble 2007 Annual Report Download - page 29

at the date of grant, straight-line over the period during
which the restrictions lapse. For these purposes, the fair
market value of the restricted stock is determined based
on the closing price of the Company’s common stock on
the grant date.
The Company uses the Black-Scholes option-pricing
model to value the Company’s stock options for each
stock option award. Using this option-pricing model,
the fair value of each stock option award is estimated on
the date of grant. The fair value of the Company’s stock
option awards, which are subject to pro-rata vesting
generally over three or four years, is expensed on a
straight-line basis over the vesting period of the stock
options. The expected volatility assumption is based on
traded options volatility of the Company’s stock over a
term equal to the expected term of the option granted.
The expected term of stock option awards granted is
derived from historical exercise experience under the
Company’s stock option plans and represents the period
of time that stock option awards granted are expected
to be outstanding. The expected term assumption
incorporates the contractual term of an option grant,
which is ten years, as well as the vesting period of an
award, which is generally pro-rata vesting over three or
four years. The risk-free interest rate is based on the
implied yield on a U.S. Treasury constant maturity with a
remaining term equal to the expected term of the option
granted.
The weighted average assumptions relating to the valua-
tion of the Company’s stock options for fi scal years 2007,
2006 and 2005 were as follows:
FISCAL YEAR 2007 2006 2005
Weighted average fair
value of grants $ 11.61 $ 11.10 $ 12.69
Volatility 28.00% 30.22% 30.00%
Risk-free interest rate 4.59% 4.91% 4.19%
Expected life 5 years 5 years 6 years
Expected dividend yield 1.47% 1.63% 0.00%
Stock-Based Compensation Activity
The following table presents a summary of the Company’s stock options activity:
NUMBER
OF SHARES
(in thousands)
WEIGHTED
AVERAGE
EXERCISE PRICE
WEIGHTED AVERAGE
REMAINING
CONTRACTUAL TERM
AGGREGATE
INTRINSIC VALUE
(in thousands)
Balance, January 29, 2005 13,860 $ 17.16 6.94 years $ 201,592
Granted 400 33.45
Exercised (4,068) 15.27
Forfeited (423) 16.94
Balance, January 28, 2006 9,769 18.62 6.61 years $ 224,067
Granted 45 36.94
Exercised (1,177) 16.90
Forfeited (132) 17.55
Balance, February 3, 2007 8,505 18.97 5.64 years $ 182,557
Granted 20 40.70
Exercised (1,852) 16.84
Forfeited (91) 22.58
Balance, February 2, 2008 6,582 $ 20.19 4.98 years $ 91,597
Vested and expected to vest in the future at
February 2, 2008 6,575 $ 20.18 4.98 years $ 91,507
Exercisable at February 2, 2008 5,983 $ 19.49 4.81 years $ 87,221
Available for grant at February 2, 2008 3,236
at the date of grant, straight-line over the period during
which the restrictions lapse. For these purposes, the fair
market value of the restricted stock is determined based
on the closing price of the Company’s common stock on
the grant date.
The Company uses the Black-Scholes option-pricing
model to value the Company’s stock options for each
stock option award. Using this option-pricing model,
the fair value of each stock option award is estimated on
the date of grant. The fair value of the Company’s stock
option awards, which are subject to pro-rata vesting
generally over three or four years, is expensed on a
straight-line basis over the vesting period of the stock
options. The expected volatility assumption is based on
traded options volatility of the Company’s stock over a
term equal to the expected term of the option granted.
The expected term of stock option awards granted is
derived from historical exercise experience under the
Company’s stock option plans and represents the period
of time that stock option awards granted are expected
to be outstanding. The expected term assumption
incorporates the contractual term of an option grant,
which is ten years, as well as the vesting period of an
award, which is generally pro-rata vesting over three or
four years. The risk-free interest rate is based on the
implied yield on a U.S. Treasury constant maturity with a
remaining term equal to the expected term of the option
granted.
The weighted average assumptions relating to the valua-
tion of the Company’s stock options for fiscal years 2007,
2006 and 2005 were as follows:
FISCAL YEAR 2007 2006 2005
Weighted average fair
value of grants $ 11.61 $ 11.10 $ 12.69
Volatility 28.00% 30.22% 30.00%
Risk-free interest rate 4.59% 4.91% 4.19%
Expected life 5 years 5 years 6 years
Expected dividend yield 1.47% 1.63% 0.00%
Stock-Based Compensation Activity
The following table presents a summary of the Company’s stock options activity:
NUMBER
OF SHARES
(in thousands)
WEIGHTED
AVERAGE
EXERCISE PRICE
WEIGHTED AVERAGE
REMAINING
CONTRACTUAL TERM
AGGREGATE
INTRINSIC VALUE
(in thousands)
Balance, January 29, 2005 13,860 $ 17.16 6.94 years $ 201,592
Granted 400 33.45
Exercised (4,068) 15.27
Forfeited (423) 16.94
Balance, January 28, 2006 9,769 18.62 6.61 years $ 224,067
Granted 45 36.94
Exercised (1,177) 16.90
Forfeited (132) 17.55
Balance, February 3, 2007 8,505 18.97 5.64 years $ 182,557
Granted 20 40.70
Exercised (1,852) 16.84
Forfeited (91) 22.58
Balance, February 2, 2008 6,582 $ 20.19 4.98 years $ 91,597
Vested and expected to vest in the future at
February 2, 2008 6,575 $ 20.18 4.98 years $ 91,507
Exercisable at February 2, 2008 5,983 $ 19.49 4.81 years $ 87,221
Available for grant at February 2, 2008 3,236
200 Annual7 Report 27