Seagate 2014 Annual Report Download - page 103
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
maximumseven-yearvestingperiod,with25%annualvestingstartingonthefirstanniversaryofthegrantdate.Iftheperformancegoalisnotachieved,vestingis
delayedtoafollowingyearinwhichtheAEPSgoalisachieved.Anyunvestedawardsfromprioryearsmayvestcumulativelyinafutureyearwithintheseven-
yearvestingperiodiftheannualAEPSgoalisachievedduringasubsequentyear.IftheAEPSgoalhasnotbeenmetbytheendofthesevenyearperiod,any
unvestedshareswillbeforfeited.
Duringfiscalyear2015and2014,theCompanydidnotgrantanyperformance-basedoptionsandperformancebasedrestrictedshareunitstoitsCEO.Infiscal
year2013,theCompanygranted0.2millionperformance-basedoptionsand0.1millionperformance-basedrestrictedshareunitstoitsCEOwhicharebasedonthe
attainmentofaminimum40%TSR(the"40%TSR"awards).The40%TSRawardscliffvestafterthreeyears,contingentuponcontinuedserviceandthe
attainmentofaminimum40%TSR,inclusiveofdividendsandsharepriceappreciation,overathree-yearperformanceperiod,whichTSRmustbesustainedfora
minimumof30consecutivetradingdays.
DeterminingFairValueofSeagateTechnologyStockPlans
Valuationandamortizationmethod—TheCompanyestimatesthefairvalueofstockoptionsgrantedusingtheBlack-Scholes-Mertonvaluationmodelanda
singleoptionawardapproach.Thisfairvalueisthenamortizedonastraight-linebasisovertherequisiteserviceperiodsoftheawards,whichisgenerallythe
vestingperiodortheremainingservice(vesting)period.
ExpectedTerm—ExpectedtermrepresentstheperiodthattheCompany'sstock-basedawardsareexpectedtobeoutstandingandwasdeterminedbasedon
historicalexperienceofsimilarawards,givingconsiderationtothecontractualtermsofthestock-basedawards,vestingschedulesandexpectationsoffuture
employeebehaviorasinfluencedbychangestothetermsofitsstock-basedawards.
ExpectedVolatility—TheCompanyusesacombinationoftheimpliedvolatilityofitstradedoptionsandhistoricalvolatilityofitsshareprice.
ExpectedDividend—TheBlack-Scholes-Mertonvaluationmodelcallsforasingleexpecteddividendyieldasaninput.Thedividendyieldisdeterminedby
dividingtheexpectedpersharedividendduringthecomingyearbythegrantdateshareprice.TheexpecteddividendassumptionisbasedontheCompany's
currentexpectationsaboutitsanticipateddividendpolicy.Also,becausetheexpecteddividendyieldshouldreflectmarketplaceparticipants'expectations,the
Companydoesnotincorporatechangesindividendsanticipatedbymanagementunlessthosechangeshavebeencommunicatedtoorotherwiseareanticipatedby
marketplaceparticipants.
Risk-FreeInterestRate—TheCompanybasestherisk-freeinterestrateusedintheBlack-Scholes-Mertonvaluationmodelontheimpliedyieldcurrently
availableonU.S.Treasuryzero-couponissueswithanequivalentremainingterm.WheretheexpectedtermoftheCompany'sstock-basedawardsdonot
correspondwiththetermsforwhichinterestratesarequoted,theCompanyperformedastraight-lineinterpolationtodeterminetheratefromtheavailableterm
maturities.
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