Seagate 2015 Annual Report Download - page 105
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
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.
FairValue—ThefairvalueoftheCompany'snonvestedawardsandperformanceawardssubjecttoanAEPSconditionforfiscalyears2016,2015,and2014,
isthepricepershareoftheCompany'scommonstockonthegrantdate.Theweighted-averagegrantdatefairvalueofawardsgrantedareasfollows:
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FiscalYears
2016 2015 2014
Nonvestedawards:
Weighted-averagefairvalue $ 41.47 $ 58.93 $ 41.18
Performanceawards:
Weighted-averagefairvalue $ 42.09 $ 59.51 $ 48.69