Jamba Juice 2013 Annual Report Download - page 77

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TABLE OF CONTENTS
JAMBA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2013, JANUARY 1, 2013 AND
JANUARY 3, 2012
12. SHARE-BASED COMPENSATION
On May 14, 2013, at its 2013 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders, upon the
recommendation of the Board of Directors, approved the Jamba, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan
authorizes the Company to provide incentive compensation in the form of stock options, stock appreciation rights (“SARs”), restricted
stock and stock units, performance shares and units, other stock-based awards, cash-based awards and deferred compensation awards.
The 2013 Plan authorizes up to 3,145,122 shares (adjusted for the Reverse Stock Split).
As of December 31, 2013, under the Company’s 2013 Plan, there remained 1,755,306 shares available for grant, and under its 2006
Plan, 31,369 shares remained available for grant. Options granted under the 2006 Plan have an exercise price equal to the closing price of
the Company’s common stock on the grant date. Options under the 2001 Plan and 1994 Plan were granted at an exercise price equal to or
greater than the fair market value of the common stock at the date of the grant, are exercisable for up to 10 years, and vest annually over a
four year period. Options outstanding under the 1994 Plan and the 2001 Plan became fully vested in 2010.
Stock Options — The fair value of options granted was estimated at the date of grant using a Black-Scholes option-pricing model.
Option valuation models, including Black-Scholes, require the input of highly subjective assumptions. The Black-Scholes option-pricing
model was developed for use in estimating fair value of traded options, which do not have vesting restrictions and are transferable. The
Company’s employee stock options have different characteristics from those of traded options, and changes in the subjective assumptions
used can materially affect the grant date fair value of a stock option award.
These assumptions include the risk-free interest rate, the expected life of the award, expected volatility and expected dividend yield. The
risk-free interest rate is based on the zero coupon U.S. Treasury rates appropriate for the expected term of the award. For expected life of the
award, the Company applies the guidance provided by the SEC Staff Accounting Bulletin No. 110. Expected volatility is based on historic
daily stock price observations of the Company’s common stock since its inception. Expected dividends are zero based on history of not
paying cash dividends on the Company’s common stock and its intention not to make dividend payments in the future. The Company
makes assumptions for the number of awards that will ultimately not vest (“forfeitures”) in determining the share-based compensation
expense for these awards. The Company uses historical data to estimate expected employee behaviors related to option exercises and
forfeitures. The Company granted 30,000 stock options during fiscal 2013.
The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions:
Fiscal Year Ended
December 31, 2013
Fiscal Year Ended
January 1, 2013
Fiscal Year Ended
January 3, 2012
Weighted-average risk-free interest rate 1.31% 0.83% 1.15%
Expected life of options (years) 6.25 6.25 6.25
Expected stock volatility 63.8% 68.7% 63.4%
Expected dividend yield 0% 0% 0%
F-20