Coach 2014 Annual Report Download - page 71
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TABLE OF CONTENTS
Coach maintains the 2010 Stock Incentive Plan to award stock options and shares to certain members of Coach management and the outside members of
its Board of Directors (“Board”). Coach maintains the 2000 Stock Incentive Plan and the 2004 Stock Incentive Plan for awards granted prior to the
establishment of the 2010 Stock Incentive Plan. These plans were approved by Coach’s stockholders. The exercise price of each stock option equals 100% of
the market price of Coach’s stock on the date of grant and generally has a maximum term of 10 years. Stock options and service based share awards that are
granted as part of the annual compensation process generally vest ratably over three years. Other stock option and share awards are subject to forfeiture until
completion of the vesting period, which ranges from one to five years. The Company issues new shares upon the exercise of stock options or vesting of share
units.
Stock Options
A summary of stock option activity during the year ended June 28, 2014 is as follows:
Granted
Exercised
Forfeited or expired
The fair value of each Coach option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-
average assumptions:
June 29,
2013
June 30,
2012
Expected term (years)
3.1
3.1
Expected volatility
39.5%
39.4%
Risk-free interest rate
0.4%
0.6%
Dividend yield
2.2%
1.5%
The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience.
Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on Coach’s stock.
The risk free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the grant. Dividend yield is based on the current expected annual
dividend per share and the Company’s stock price.
The weighted-average grant-date fair value of options granted during fiscal 2014, fiscal 2013 and fiscal 2012 was $9.79, $13.02, and $15.59,
respectively. The total intrinsic value of options exercised during fiscal 2014, fiscal 2013 and fiscal 2012 was $28,028, $76,956, and $197,793, respectively.
The total cash received from option exercises was $44,541, $74,277, and $178,292 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively, and the cash tax
benefit realized for the tax deductions from these option exercises was $10,419, $29,230, and $73,982, respectively.
At June 28, 2014, $26,059 of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a
weighted-average period of 1.0 year.
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