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Table of Contents
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:



Risk-free interest rate (1) 1.60%
1.86%
1.14%
Price Volatility (2) 47.81%
53.73%
55.93%
Expected term (years) (3) 6.25
6.25
6.20
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 initial public offering of the Company's common stock, 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 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 2015, the Company granted restricted stock units ("RSUs") under the 2010 Plan, including 0.4 million RSUs with performance conditions. The fair
value of the RSUs is determined based on the Company's closing stock price on the day prior to the grant date in accordance with the 2010 Plan. The expense
for RSUs without performance conditions 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. All of the RSUs granted during 2015 that are earned based on the achievement of performance criteria will vest on April
15, 2018. RSUs without performance conditions vest ratably over four years.
The Company's activity with respect to RSUs and restricted stock, including awards with performance conditions, for 2015 was as follows:






Unvested, January 31, 2015 1,435
$ 17.75
Granted (1) 1,292
$ 16.39
Performance Shares Adjustment (2) 366
$ 15.88
Vested (623)
$ 18.07
Forfeited (258)
$ 16.94
Unvested, January 30, 2016 2,212
$ 16.66
(1) Approximately 0.5 million RSUs with three-year performance conditions are included in this amount which represents 125% of the number of shares granted.
This is based on current estimates against predefined financial performance targets.
(2) Represents a change in the number of 2014 RSUs with performance conditions expected to vest. The change was due to an updated estimate of the Company's
achievement against predefined financial targets. This amount represents approximately 77% of the number of RSUs with performance conditions granted in
2014.
The total fair value/intrinsic value of RSUs and restricted stock that vested was $11.2 million, $13.4 million, and $8.5 million, during 2015, 2014, and 2013,
respectively. As of January 30, 2016, there was approximately $20.4 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 1.8 years.
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