Memorex 2014 Annual Report Download - page 69

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stock options. Exercise prices of awards issued under these plans are equal to the fair value of the Company's
stock on the date of grant. As of December 31, 2014, there were 2,591,649 stock-based compensation awards
outstanding that were issued under these plans and consist of stock options and restricted stock.
The 2011 Incentive Plan was approved and adopted by our shareholders on May 4, 2011 and became effective
immediately. The 2011 Incentive Plan was amended and approved by our shareholders on May 8, 2013. The 2011
Incentive Plan permits the grant of stock options, SARs, restricted stock, restricted stock units, dividend
equivalents, performance awards, stock awards and other stock-based awards. The aggregate number of shares of
our common stock that may be issued under all stock-based awards made under the 2011 Incentive Plan is 6.0
million. The number of shares available for awards, as well as the terms of outstanding awards, is subject to
adjustments as provided in the 2011 Incentive Plan for stock splits, stock dividends, recapitalization and other
similar events. Awards may be granted under the 2011 Incentive Plan until the earlier to occur of May 3, 2021 or the
date on which all shares available for awards under the 2011 Incentive Plan have been granted; provided, however,
that incentive stock options may not be granted after February 10, 2021.
Stock-based compensation awards issued under the 2011 Incentive Plan generally have a term of ten years
and, for employees, vest over a three-year period. Awards issued to directors under this plan become fully
exercisable on the first anniversary of the grant date. Stock options granted under these plans are not incentive
stock options. Exercise prices of awards issued under these plans are equal to the fair value of the Company's
stock on the date of grant.
As of December 31, 2014 we had 2,655,254 of stock-based compensation awards consisting of stock options
and restricted stock outstanding under the 2011 Incentive Plan. As of December 31, 2014 there were 1,929,545
shares available for grant under our 2011 Incentive Plan.
Stock Options
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing
model. The assumptions used in the valuation model are supported primarily by historical indicators and current
market conditions. Volatility was calculated using the historical weekly close rate for a period of time equal to the
expected term. The risk-free rate of return was determined by using the U.S. Treasury yield curve in effect at the
time of grant. The expected term was calculated on an aggregated basis and estimated based on an analysis of
options already exercised and any foreseeable trends or changes in recipients’ behavior. In determining the
expected term, we considered the vesting period of the awards, the contractual term of the awards, historical
average holding periods, stock price history, impacts from recent restructuring initiatives and the relative weight for
each of these factors. The dividend yield was based on the latest dividend payments made on or announced by the
date of the grant.
The following table summarizes our weighted average assumptions used in the valuation of options for the
years ended December 31:
2014 2013 2012
Volatility 46% 43% 45%
Risk-free interest rate 1.93% 1.05% 1.07%
Expected life (months) 73 72 71
Dividend yield —% —% —%