Mercury Insurance 2015 Annual Report Download - page 92

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80
Expected volatilities are based on historical volatility of the Company’s stock over the term of the stock options. The
Company estimated the expected term of stock options, which represents the period of time that stock options granted are expected
to be outstanding, by using historical exercise patterns and post-vesting termination behavior. The risk free interest rate is determined
based on U.S. Treasury yields with equivalent remaining terms in effect at the time of the grant.
The following table presents a summary of the stock option activity under the Company’s plans for the year ended
December 31, 2015:
Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual Term
(Years)
Aggregate
Intrinsic Value
(in 000’s)
Outstanding at January 1, 2015 248,000 $ 49.85
Granted —
Exercised (43,000) $ 49.10
Canceled or expired (37,000) $ 58.48
Outstanding at December 31, 2015 168,000 $ 48.14 3.8 $ 305
Exercisable at December 31, 2015 128,000 $ 49.58 2.7 $ 183
The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the
Company’s closing stock price and the stock option exercise price, multiplied by the number of in-the-money stock options) that
would have been received by the stock option holders had all stock options been exercised on December 31, 2015. The aggregate
intrinsic values of stock options exercised were $303,000, $1,160,000, and $862,000 during 2015, 2014, and 2013, respectively.
The total fair values of stock options vested were $142,000, $142,000, and $146,000 during 2015, 2014, and 2013, respectively.
The following table presents information regarding stock options outstanding at December 31, 2015:
Options Outstanding Options Exercisable
Range of Exercise Prices
Number of
Options
Weighted-
Average
Remaining
Contractual Life
(Years)
Weighted-
Average
Exercise
Price
Number of
Options
Weighted-
Average
Exercise
Price
$33.61-$47.61 88,000 6.1 $ 43.29 48,000 $ 43.09
$50.01-$51.51 38,000 2.0 $ 50.72 38,000 $ 50.72
$54.93-$57.50 42,000 0.8 $ 55.96 42,000 $ 55.96
As of December 31, 2015, $202,000 of total unrecognized compensation cost related to non-vested stock options is expected
to be recognized over a weighted-average remaining contractual life of 1.4 years.
Restricted Stock Unit Awards
Under the 2015 Plan and 2005 Plan, the Compensation Committee of the Company’s Board of Directors granted
performance-based vesting restricted stock unit awards to the Company’s senior management and key employees.
The following table presents the restricted stock unit grants summary at December 31, 2015:
Grant Year
2015 2014 2013
Three-year performance period ending December 31, 2017 2016 2015
Vesting shares, target (net of forfeited) 99,250 85,500 78,500
Vesting shares, maximum (net of forfeited) 186,094 160,313 176,625