O'Reilly Auto Parts 2014 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2014 O'Reilly Auto Parts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

FORM 10-K
57
The table below identifies the shares that have been authorized for issuance and the shares available for future issuance under the Company
plans, as of December 31, 2014 (in thousands):
Plans
Total Shares Authorized for Issuance
under the Plans
Shares Available for Future
Issuance under the Plans
Employee Incentive Plans 34,000 6,552
Director Stock Plan 1,000 263
Performance Incentive Plan 650 373
Employee Stock Purchase Plans 4,250 824
Profit Sharing and Savings Plan 4,200 349
Stock options:
The Company's employee incentive plans provide for the granting of stock options for the purchase of common stock of the Company
to certain key employees of the Company. Employee stock options are granted at an exercise price that is equal to the closing market
price of the Company's common stock on the date of the grant. Employee stock options granted under the plans expire after ten years
and typically vest 25% per year, over four years. The Company records compensation expense for the grant date fair value of the option
awards, adjusted for estimated forfeitures, evenly over the minimum required service period.
The table below identifies the employee stock option activity under these plans during the year ended December 31, 2014:
Shares
(in thousands)
Weighted-
Average Exercise
Price
Average
Remaining
Contractual Terms
(in years)
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2013 5,177 $ 54.28
Granted 392 150.82
Exercised (1,310)45.26
Forfeited (234)85.25
Outstanding at December 31, 2014 4,025 $ 64.82 5.8 $ 514,443
Vested or expected to vest at December 31, 2014 3,879 $ 63.61 5.7 $ 500,413
Exercisable at December 31, 2014 2,617 $ 43.60 4.6 $ 389,953
The Company's director stock plan provides for the granting of stock options for the purchase of common stock of the Company to
directors of the Company. Director stock options are granted at an exercise price that is equal to the closing market price of the Company's
common stock on the date of the grant. Director stock options granted under the plans expire after seven years and vest fully after six
months. The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period.
The table below identifies the director stock option activity under this plan during the year ended December 31, 2014:
Shares
(in thousands)
Weighted-
Average Exercise
Price
Average
Remaining
Contractual Terms
(in years)
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2013 50 $ 37.37
Granted ——
Exercised (10)30.08
Forfeited — —
Outstanding at December 31, 2014 40 $ 39.19 1.6 $ 6,137
Vested or expected to vest at December 31, 2014 40 $ 39.19 1.6 $ 6,137
Exercisable at December 31, 2014 40 $ 39.19 1.6 $ 6,137
The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-
Scholes model requires the use of assumptions, including the risk free rate, expected life, expected volatility and expected dividend yield.
• Risk-free interest rate – The United States Treasury rates in effect at the time the options are granted for the options' expected
life.
•