Rite Aid 2013 Annual Report Download - page 97

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 2, 2013, March 3, 2012 and February 26, 2011
(In thousands, except per share amounts)
15. Stock Option and Stock Award Plans (Continued)
Stock Options
The Company determines the fair value of stock options issued on the date of grant using the
Black-Scholes-Merton option-pricing model. The following weighted average assumptions were used for
options granted in fiscal 2013, 2012 and 2011:
2013 2012 2011
Expected stock price volatility(1) ............ 85% 79% 79%
Expected dividend yield(2) ................. 0.00% 0.00% 0.00%
Risk-free interest rate(3) .................. 0.71% 1.45% 1.92%
Expected option life(4) ................... 5.5 years 5.5 years 5.5 years
(1) The expected volatility is based on the historical volatility of the stock price over the most
recent period equal to expected life of the option.
(2) The dividend rate that will be paid out on the underlying shares during the expected term
of the options. The Company does not currently pay dividends on its common stock, as
such, the dividend rate is assumed to be zero percent.
(3) The risk free interest rate is equal to the rate available on United States Treasury
zero-coupon issues as of the grant date of the option with a remaining term equal to the
expected term.
(4) The period of time for which the option is expected to be outstanding. The Company
analyzed historical exercise behavior.
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