Barnes and Noble 2013 Annual Report Download - page 47

4. STOCK-BASED COMPENSATION
The Company maintains four share-based incentive plans:
the 1996 Incentive Plan, the 2004 Incentive Plan, the
2009 Incentive Plan and the Amended and Restated 2009
Incentive Plan. Prior to June 2, 2009, the Company issued
restricted stock and stock options under the 1996 and 2004
Incentive Plans. On June 2, 2009, the Company’s share-
holders approved the 2009 Incentive Plan. Under the 2009
Incentive Plan, the Company has issued restricted stock
units, restricted stock and stock options. On September 11,
2012, the Company’s shareholders approved the Amended
and Restated 2009 Incentive Plan. Under the Amended
and Restated 2009 Incentive Plan, the Company has issued
restricted stock units, restricted stock and stock options.
The maximum number of shares issuable under the
Amended and Restated 2009 Incentive Plan is 1,700,000,
plus shares that remain available under the Company’s
shareholder-approved 2009 and 2004 Incentive Plan. At
April 27, 2013, there were approximately 2,567,842 shares
of common stock available for future grants under the
Amended and Restated 2009 Incentive Plan.
A restricted stock award is an award of common stock that
is subject to certain restrictions during a specified period.
Restricted stock awards are independent of option grants
and are generally subject to forfeiture if employment ter-
minates prior to the release of the restrictions. The grantee
cannot transfer the shares before the restricted shares vest.
Shares of unvested restricted stock have the same voting
rights as common stock, are entitled to receive dividends
and other distributions thereon and are considered to be
currently issued and outstanding. The Company’s restricted
stock awards vest over a period of one to four years. The
Company expenses the cost of the restricted stock awards,
which is determined to be the fair market value of the
shares 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.
A restricted stock unit is a grant valued in terms of the
Company’s common stock, but no stock is issued at the
time of grant. The restricted stock units may be redeemed
for one share of common stock each once vested. Restricted
stock units are generally subject to forfeiture if employ-
ment terminates prior to the release of the restrictions.
The grantee cannot transfer the units except in very limited
circumstances and with the consent of the compensation
committee. Shares of unvested restricted stock units have
no voting rights but are entitled to receive dividends and
other distributions thereon. The Company’s restricted
stock units vest over a period of one to four years. The
Company expenses the cost of the restricted stock units,
which is determined to be the fair market value of the
shares 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 unit 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 generally subject to pro-rata vesting annually over four
years, is expensed on a straight-line basis over the vesting
period of the stock options. The expected volatility assump-
tion 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 gener-
ally pro-rata vesting annually over 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 Company recognizes stock-based compensation costs,
net of estimated forfeitures, for only those shares expected
to vest on a straight-line basis over the requisite service
period of the award. The Company estimates the forfeiture
rates based on its historical experience.
The weighted average assumptions relating to the valua-
tion of the Company’s stock options for fiscal years 2013
and 2012 are shown below. No stock options were granted
during fiscal 2011.
Fiscal Year 2013 2012
Weighted average fair value of grants $7.80 $9.85
Volatility 86.13% 78.52%
Risk-free interest rate 0.67% 0.92%
Expected life 5 years 5 years
Expected dividend yield 0.00% 0.00%
2013 Annual Report 45