Best Buy 2015 Annual Report Download - page 89

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Table of Contents
82
Net cash proceeds from the exercise of stock options were $42 million, $158 million and $1 million in fiscal 2015, 2014 and
2013 (11-month), respectively.
There was $5 million, $13 million and $0 million of income tax benefits realized from stock option exercises in fiscal 2015,
2014 and 2013 (11-month), respectively.
In fiscal 2015, 2014 and 2013 (11-month), we estimated the fair value of each stock option on the date of grant using a lattice
or Black Scholes valuation model (for certain individuals) with the following assumptions:
12-Month 12-Month 11-Month
Valuation Assumptions(1) 2015 2014 2013
Risk-free interest rate(2) 0.1% – 2.4% 0.1% – 1.8% 0.1% – 2.0%
Expected dividend yield 2.5% 2.0% 2.2%
Expected stock price volatility(3) 40% 46% 44%
Expected life of stock options (in years)(4) 6.0 5.9 5.9
(1) Forfeitures are estimated using historical experience and projected employee turnover.
(2) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options.
(3) In projecting expected stock price volatility, we consider both the historical volatility of our stock price as well as implied volatilities from exchange-
traded options on our stock.
(4) We estimate the expected life of stock options based upon historical experience.
Market-Based Share Awards
The fair value of market-based share awards is determined based on generally accepted valuation techniques and the closing
market price of our stock on the date of grant. A summary of the status of our nonvested market-based share awards at
January 31, 2015, and changes during fiscal 2015, is as follows:
Market-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at February 1, 2014 1,636,000 $ 20.91
Granted 564,000 $ 29.22
Vested (127,000) $ 19.16
Forfeited/Canceled (369,000) $ 19.23
Outstanding at January 31, 2015 1,704,000 $ 24.16
At January 31, 2015, there was $20 million of unrecognized compensation expense related to nonvested market-based share
awards that we expect to recognize over a weighted-average period of 1.9 years.
Time-Based Share Awards
The fair value of time-based share awards is determined based on the closing market price of our stock on the date of grant.
This value is reduced by the present value of expected dividends during vesting when the employee is not entitled to dividends.
A summary of the status of our nonvested time-based share awards at January 31, 2015, and changes during fiscal 2015, is as
follows:
Time-Based Share Awards Shares
Weighted-
Average Fair
Value per Share
Outstanding at February 1, 2014 7,065,000 $ 21.49
Granted 2,609,000 $ 28.49
Vested (2,657,000) $ 22.77
Forfeited/Canceled (1,474,000) $ 20.68
Outstanding at January 31, 2015 5,543,000 $ 24.40