Express 2011 Annual Report Download - page 85

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The Company uses the Black-Scholes-Merton option-pricing model for valuation of stock options granted to
employees and directors. The Company’s determination of the fair value of stock options is affected by the
Company’s stock price as well as a number of subjective and complex assumptions. These assumptions include
the Company’s expected stock price volatility over the term of the awards, expected term of the award, dividend
yield, and risk-free interest rate.
The fair value of stock options was estimated at the date of grant using the Black-Scholes-Merton option pricing
model with the following weighted-average assumptions:
2011 2010
Risk-free interest rate (1) .................................. 2.27% 2.84%
Price Volatility (2) ....................................... 54% 54%
Expected term (years) (3) .................................. 6.25 6.25
Dividend yield (4) ........................................ — —
(1) Represents the yield on U.S. Treasury securities with a term consistent with the expected term of the stock
options.
(2) Because the Company’s stock has a limited history of being publicly traded, this was based on the historical
volatility of selected comparable companies over a period consistent with the expected term of the stock
options. Comparable companies were selected primarily based on industry, stage of life cycle, and size.
(3) Calculated utilizing the “simplified” methodology prescribed by SAB No. 107 due to the lack of historical
exercise data necessary to provide a reasonable basis upon which to estimate the term.
(4) Based on the fact that the Company does not currently plan on paying regular dividends.
Restricted Stock Units and Restricted Stock
During 2011, the Company granted restricted stock units (“RSUs”) and restricted stock under the 2010 Plan. The
fair value of the RSUs and restricted stock is determined based upon the Company’s stock price on the date of
grant. The expense for RSUs and restricted stock is recognized using the straight-line attribution method. These
awards have vesting conditions with requisite service periods of 3 years for the Chief Executive Officer and
Board members and 4 years for other individuals.
The Company’s activity with respect to RSUs and restricted stock for 2011 was as follows:
Number of
Shares
Grant Date
Weighted Average
Fair Value
(in thousands, except per share amounts)
Unvested, January 29, 2011 ............. 44 $ 4.88
Granted ......................... 939 $18.96
Vested .......................... (14) $ 7.67
Forfeited ........................ (69) $18.14
Unvested, January 28, 2012 ............. 900 $18.52
The total fair value/intrinsic of RSUs and restricted stock that vested during 2011 was $0.1 million. No RSUs or
restricted stock vested during 2010. As of January 28, 2012, there was approximately $12.8 million of total
unrecognized compensation expense related to unvested RSUs and restricted stock, which is expected to be
recognized over a weighted-average period of approximately 2.1 years.
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