Hibbett Sports 2011 Annual Report Download - page 46

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We calculate the expected term for our stock options based on historical employee exercise behavior. Historically, an
increase in our stock price has led to a pattern of earlier exercise by employees. We also expected the reduction of the
contractual term from 10 years to 8 years to facilitate a pattern of earlier exercise by employees and to contribute to a gradual
decline in the average expected term in future periods. With the absence of substantial new option grants, the expected term may
increase slightly because it will be affected to a greater extent by director options which have a longer contractual life.
The volatility used to value stock options is based on historical volatility. We calculate historical volatility using an
average calculation methodology based on daily price intervals as measured over the expected term of the option. We have
consistently applied this methodology since our adoption of the original disclosure provisions of ASC Topic 718, Stock
Compensation.
In accordance with ASC Topic 718, we base the risk-free interest rate on the annual continuously compounded risk-free
rate with a term equal to the option’s expected term. The dividend yield is assumed to be zero since we have no current plan to
declare dividends.
Activity for our option plans during the fiscal year ended January 29, 2011 was as follows:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
($000's)
Options outstanding at January 30, 2010 1,241,214 17.27$ 4.47 7,331$
Granted 46,728 27.91
Exercised (653,963) 13.87
Forfeited, cancelled or expired (2,938) 27.60
Options outstanding at January 29, 2011 631,041 21.54$ 4.90 6,933$
Exercisable at January 29, 2011 585,991 21.76$ 4.82 6,311$
The weighted average grant fair value of options granted during the fiscal years ended January 29, 2011, January 30,
2010 and January 31, 2009 was $11.00, $9.48 and $7.43, respectively. The compensation expense included in store operating,
selling and administrative expenses and recognized during the fiscal years ended January 29, 2011, January 30, 2010 and January
31, 2009 was $0.8 million, $1.8 million and $2.0 million, respectively, before the recognized income tax benefit of $0.2 million,
$0.4 million and $0.4 million, respectively.
The total intrinsic value of stock options exercised during the fiscal years ended January 29, 2011, January 30, 2010
and January 31, 2009 was $11.3 million, $1.3 million and $1.2 million, respectively. The total cash received from these stock
option exercises during Fiscal 2011, Fiscal 2010 and Fiscal 2009 was $9.1 million, $0.8 million and $0.7 million, respectively.
Excess income tax proceeds from stock option exercises are included in cash flows from financing activities as required by ASC
Topic 230, Statement of Cash Flows. As of January 29, 2011, there was no unrecognized compensation cost related to nonvested
stock options.
Restricted Stock and Performance-Based Units
RSUs and PSUs are granted with a fair value equal to the closing market price of our common stock on the date of
grant. All PSUs have been awarded in the form of restricted stock units. Compensation expense is recorded straight-line over
the vesting period and, in the case of PSUs, at the estimated percent of achievement. Restricted stock unit awards generally cliff
vest in four to five years from the date of grant for those awards that are not performance-based. PSUs provide for awards based
on achievement of certain predetermined corporate performance goals and cliff vest in one to five years from the date of grant
after achievement of stated performance criterion and upon meeting stated service conditions.