Rue 21 2011 Annual Report Download - page 54

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rue21, inc. and subsidiary
Notes to Consolidated Financial Statements — (continued)
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.
On November 11, 2011, the Compensation Committee approved a new form of Restricted Stock Unit Award
Agreement (the “RSU Agreement”) for the 2009 Plan, which replaces the prior form of Restricted Stock Award
Agreement. The RSU agreement clarifies delivery procedures and withholding treatment for stock to be received
upon vesting of awards. The material terms of an award of restricted stock units, including applicable vesting terms,
the treatment of awards upon termination of employment and potential tax consequences, were not affected by
approval of the Committee’s approval of the RSU Agreement.
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 28, 2012.
Common
Stock Options
Weighted-
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(in thousands) (per share) (in years)
Outstanding January 29, 2011 ................. 1,441 $15.63 7.83 $21,349
Granted ................................ 298 29.59
Exercised ............................... (87) 6.45
Expired or forfeited ....................... (52) 25.43
Outstanding January 28, 2012 ................. 1,600 $18.41 7.32 $15,680
Vested at January 28, 2012 ................... 790 $10.43 6.19 $12,686
As of January 28, 2012, the Company had 2,674,324 shares available for stock grants. The Company
recognized $4,943, $2,240 and $410 in compensation expense related to stock options for the fiscal years 2011,
2010, and 2009, respectively. The weighted-average fair value of stock options at the grant date was $16.13, $17.37
and $6.92 for the fiscal years 2011, 2010, and 2009, respectively. The intrinsic value of options exercised was
$2,194, $3,777 and $13,834 for the fiscal years 2011, 2010, and 2009, respectively. All outstanding vested options
are currently exercisable as of January 28, 2012.
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:
Fiscal Year Ended
January 28, January 29, January 30,
2012 2011 2010
Risk-free interest rate(1) ........................... 1.24% -3.10% 1.52% -2.46% 2.6%-3.3%
Dividend yield ................................... — — —
Volatility factors for the expected market price of the
Company’s common stock(2) ....................... 55.0% -56.0% 55.0% 53.0%-60.0%
Weighted average expected term(3) .................. 6.0years 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.
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