Rue 21 2012 Annual Report Download - page 55

rue21, inc.
Notes to Consolidated Financial Statements — Continued
years from the date of issuance. On March 9, 2012, the Compensation Committee approved a form of Performance
Share Unit Award Agreement (the “PRSU Agreement”) for the 2009 Plan. For 2012, performance share units were
earned over a performance period of one year, and vest ratably over three years. To date, 902,508 stock options,
357,152 restricted stock units, and 154,973 performance share unit awards have been granted and no stock
appreciation rights or restricted stock have been issued under the 2009 Plan. The Company expects to reissue from
treasury stock for future issuances of share based payments.
Effective May 15, 2003, the Company adopted the 2003 Ownership Incentive Plan (the 2003 Plan) pursuant to
which key employees, officers, and directors were eligible to receive options to purchase common stock for an
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 February 2, 2013.
Common
Stock Options
Weighted-
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
(in thousands) (per share) (in years)
Outstanding January 29, 2012 ................. 1,600 $18.41 7.32 $15,680
Granted ................................ 125 27.33
Exercised ............................... (157) 6.93
Expired or forfeited ....................... (15) 21.68
Outstanding February 2, 2013 ................. 1,553 $20.26 6.66 $16,056
Vested at February 2, 2013 ................... 953 $15.55 5.89 $14,122
As of February 2, 2013, the Company had 2,211,340 shares available for stock grants. The Company
recognized $10.5 million, $4.9 million, and $2.2 million in compensation expense related to stock options for the
fiscal years 2012, 2011, and 2010, respectively. The weighted-average fair value of stock options at the grant date
was $13.67, $16.13 and $17.37 for the fiscal years 2012, 2011, and 2010, respectively. The intrinsic value of options
exercised was $3.5 million, $2.2 million and $3.8 million for the fiscal years 2012, 2011, and 2010, respectively. All
outstanding vested options are currently exercisable as of February 2, 2013. 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
February 2, January 28, January 29,
2013 2012 2011
Risk-free interest rate(1) ........................... 1.1% - 1.8% 1.24% - 3.10% 1.52% - 2.46%
Dividend yield ................................... — — —
Volatility factors for the expected market price of the
Company’s common stock(2) ....................... 53.0% 55.0% - 56.0% 55.0%
Weighted average expected term(3) .................. 6.0years 6.0 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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