Rue 21 2010 Annual Report Download - page 63

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aggregate of up to 19.8% of the number of shares of the common stock outstanding upon adoption of the 2003 Plan
based on eligibility, vesting, and performance standards established by the board of directors. Upon adopting the
2009 Plan, the Company discontinued use of the 2003 Plan and no further option grants will be made under the 2003
Plan.
Stock Option Activity
The following table represents stock options granted, vested, and expired under the existing share based
compensation plans for fiscal year ended January 29, 2011.
Common
Stock
Options
Weighted-
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(In thousands) (Per share) (In years)
Outstanding January 30, 2010 ............. 1,170 $ 7.84 8.13 $23,615
Granted ............................ 438 $32.97
Exercised ........................... (143) $ 4.84
Expired or forfeited ................... (24) $16.36
Outstanding January 29, 2011 ............. 1,441 $15.63 7.83 $21,349
Vested at January 29,2011 . . .............. 560 $ 5.62 6.48 $13,245
As of January 29, 2011, the Company had 3,122,524 shares available for stock grants. The Company
recognized $2,240, $410 and $0 in compensation expense related to stock options for the fiscal years ended
January 29, 2011, January 30, 2010 and January 31, 2009, respectively. The weighted-average fair value of stock
options at the grant date was $17.37, $6.92 and $0.43 for the fiscal years ended January 29, 2011, January 30, 2010
and January 31, 2009, respectively. The intrinsic value of options exercised was $3,777, $13,834 and $617 for the
fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009, respectively. All outstanding vested
options are currently exercisable as of January 29, 2011.
The fair value of stock options was estimated at the date of grant using a Black-Scholes option pricing model
with the following range of weighted-average assumptions:
January 29,
2011
January 30,
2010
January 31,
2009
Fiscal Year Ended
Risk-free interest rate(1) ................. 1.52%-2.46% 2.6%-3.3% 4.7%
Dividend yield ........................ — — —
Volatility factors for the expected market price
of the
Company’s common stock(2) .............. 55.0% 53.0%-60.0% 55.0%
Weighted average expected term(3) ......... 6.3years 6.3 years 6.3 years
(1) Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life
of stock options.
(2) Expected stock price volatility is based on comparable volatilities of peer companies within rue21’s industry.
(3) Represents the period of time options are expected to be outstanding. The weighted-average expected option
term was determined using the “simplified method”, as allowed by Staff Accounting Bulletin Topic 14. The
expected term used to value a share option grant under the simplified method is the midpoint between the
vesting date and the contractual term of the share option.
59
rue21, inc. and subsidiary
Notes to Consolidated Financial Statements — (continued)