Sprouts Farmers Market 2014 Annual Report Download - page 108

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The estimated fair values of options granted during 2014, 2013 and 2012 range from $1.12 to $10.66,
and were calculated using the following assumptions:
2014 2013 2012
Dividend yield ............... 0.00% 0.00% 0.00%
Expected volatility ............ 31.19% to 32.19% 31.03% to 37.38% 32.36% to 38.59%
Risk free interest rate ......... 1.20% to 1.33% 0.56% to 1.36% 0.40% to 0.77%
Expected term, in years ....... 4.31 4.00 to 5.00 3.75 to 5.00
The grant date weighted average fair value of the 0.9 million options issued but not vested as of
December 28, 2014 was $5.42. The grant date weighted average fair value of the 2.7 million options
issued but not vested as of December 29, 2013 was $2.09. The grant date weighted average fair value of
the 5.8 million options issued but not vested as of December 30, 2012 was $1.45.
The following table summarizes grant date weighted average fair value of options granted and options
forfeited:
Year Ended
December 28,
2014
December 29,
2013
December 30,
2012
Grant date weighted average fair value of
options granted ..................... $10.39 $4.27 $1.99
Grant date weighted average fair value of
options forfeited ..................... $ 6.79 $1.85 $1.17
Expected volatility is calculated based upon historical volatility data from a group of comparable
companies over a timeframe consistent with the expected life of the awards. The expected term is
estimated based on the expected period that the options are anticipated to be outstanding after initial grant
until exercise or expiration based upon various factors including the contractual terms of the awards and
vesting schedules. The expected risk-free rate is based on the U.S. Treasury yield curve rates in effect at
the time of the grant using the term most consistent with the expected life of the award. Dividend yield was
estimated at zero as the Company does not anticipate making regular future distributions to stockholders.
The following table summarizes option activity:
Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (In Years)
Aggregate
Intrinsic
Value
Outstanding at January 1, 2012 .......... 9,582,012 $3.33
Granted ............................. 2,609,200 6.32
Forfeited ............................. (398,222) 3.97
Exercised ............................ (220,000) 3.33 $ 592
Outstanding at December 30, 2012 ....... 11,572,990 3.99 5.65 $59,688
Exercisable—December 30, 2012 ........ 5,743,320 3.61 5.45 $31,849
Vested/Expected to vest—December 30,
2012 .............................. 11,533,489 3.98 5.65 $59,639
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