Express 2013 Annual Report Download - page 58

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Table of Contents
The following provides additional information regarding the Company's stock options:
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
Weighted average grant date fair value of options
granted $9.50
$12.75
$10.01
Total intrinsic value of options exercised $1,001
$270
$102
As of February 1, 2014, there was approximately $10.0 million of total unrecognized compensation expense related to stock options, which is expected to be
recognized over a weighted-average period of approximately 1.5 years.
The Company uses the Black-Scholes-Merton option-pricing model to value 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 risk-free interest rate, the Company's expected stock price volatility over the term of the awards, expected term of the award, and dividend yield.
The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model with the following weighted-average
assumptions:
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
Risk-free interest rate (1) 1.14%
1.12%
2.27%
Price Volatility (2) 55.9%
55.9%
54.0%
Expected term (years) (3) 6.20
6.17
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) For the first two years following the Company's IPO, this was based on the historical volatility of selected comparable companies over a period consistent with
the expected term of the stock options because the Company had a limited history of being publicly traded. Comparable companies were selected primarily
based on industry, stage of life cycle, and size. Beginning with the second anniversary of the IPO in May 2012, the Company began using its own volatility
as an additional input in the determination of expected volatility.
(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) The Company does not currently plan on paying regular dividends.
Restricted Stock Units and Restricted Stock
During 2013, the Company granted restricted stock units ("RSUs") under the 2010 Plan, including 0.5 million RSUs with performance conditions.The fair
value of the RSUs is determined based on the Company's stock price on the grant date. The expense for RSUs is recognized using the straight-line attribution
method.The expense for RSUs with performance conditions is recognized using the graded vesting method based on the expected achievement of the
performance conditions. The RSUs with performance conditions are also subject to time-based vesting with requisite periods of 2 years for the Chief Executive
Officer and 3 years for other employees. RSUs without performance conditions vest ratably over 4 years.
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