Hibbett Sports 2012 Annual Report Download - page 46

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The compensation cost for these plans was as follows (in thousands):
January 28, January 29, January 30,
2012 2011 2010
Stock-based compensation expense by type:
Stock options 460$ 792$ 1,799$
Restricted stock units 4,857 3,937 2,278
Employee stock purchases 76 67 80
Director deferred compensation 60 - -
Total stock-based compensation expense 5,453 4,796 4,157
Income tax benefit recognized 1,987 1,666 1,277
Stock-based compensation expense, net of income tax 3,466$ 3,130$ 2,880$
Fiscal Year Ended
Stock-based and deferred stock compensation expenses are included in store operating, selling and administrative
expenses. There is no capitalized stock-based compensation cost.
The income tax benefit recognized in our consolidated financial statements, as disclosed above, is based on the amount
of compensation expense recorded for book purposes. The actual income tax benefit realized in our income tax return is based on
the intrinsic value, or the excess of the market value over the exercise or purchase price, of stock options exercised and restricted
stock unit awards vested during the period. The actual income tax benefit realized for the deductions considered on our income
tax returns for Fiscal 2012 was from option exercises and restricted stock releases and totaled $3.2 million. The actual income
tax benefit realized for the deductions considered on our income tax returns for Fiscal 2011 and Fiscal 2010, was from option
exercises and totaled $4.5 million and $0.5 million, respectively.
Stock Options
Stock options are granted with an exercise price equal to the closing market price of our common stock on the date of
grant. Vesting and expiration provisions vary between equity plans, but options typically vest over a four or five year period in
equal installments beginning on the first anniversary of the grant date and typically expire on the eighth or tenth anniversary of
the date of grant. Grants awarded to outside directors under both the DEP and Deferred Plan vest immediately upon grant and
expire on the tenth anniversary of the date of grant.
Following is the weighted average fair value of each option granted during Fiscal 2012. The fair value was estimated
on the date of grant using the Black-Scholes pricing model with the following weighted average assumptions for each period:
July 30, October 29, January 28,
2011 2011 2012
Grant date Mar 16 Mar 31 Jun 30 Sep 30 Dec 31
Exercise price $31.26 $35.81 $40.71 $33.90 $45.18
Weighted average fair value at date of grant $12.58 $14.52 $15.95 $13.86 $17.92
Expected option life (years) 4.67 4.67 4.67 4.75 4.75
Expected volatility 45.52 45.26 44.31 47.6 46.18
Risk-free interest rate 1.72% 2.07% 1.61% 0.90% 0.78%
Dividend yield None None None None None
Quarter Ended
2011
April 30,
We calculate the expected term for our stock options based on the historical exercise behavior of our participants.
Historically, an increase in our stock price has led to a pattern of earlier exercise by participants. Typically, grants made to our
Directors have a contractual term of 10 years, while grants made to our employees have a contractual term of 8 years. We have
not awarded a stock option grant to employees since 2009. With the absence of option grants to employees, we anticipate the
expected term will increase 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.