Sprouts Farmers Market 2015 Annual Report Download - page 98

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90
During 2013, the Company awarded 209,000 options to team members under the 2011 Option Plan
at exercise prices of $9.15 and grant date fair values of $2.33 to $3.10.
Stock Options
Prior to the IPO, options were granted to certain team members at a price determined by the Board in
its sole discretion. The maximum contractual term for such options was seven years. The options vest in
accordance with the terms set forth in the grant letter and vary depending on if they are time-based or
performance-based. Time-based options generally vest ratably over a period of 12 quarters (three years)
and performance-based options vest over a period of three years based on financial performance targets
set for each year. Vesting schedules of future grants may differ. In the event of a change in control as
defined in the 2013 Incentive Plan and 2011 Option Plan, all options become immediately vested and
exercisable.
In the event of a change in control as defined in the award agreements issued under the 2013
Incentive Plan and in the 2011 Option Plan, all options and awards issued prior to 2015 become
immediately vested and exercisable.
For grants issued in 2015, the options and awards only become immediately vested in the event of a
change in control (as defined in the applicable team member award agreement) if the grants are not continued
or assumed by the acquiror on a substantially equivalent basis. If the options and awards continue or are
assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer
without cause or by the team member for good reason (as such terms are defined in the applicable team
member award agreement) within 24 months following the change in control, such options or awards will
become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per
the schedule outlined in the applicable team member award agreement.
Shares issued for option exercises and RSU vesting are newly issued shares.
The estimated fair values of options granted during 2015, 2014 and 2013 range from $2.33 to
$10.66, and were calculated using the following assumptions:
2015 2014 2013
Dividend yield........... 0.00% 0.00% 0.00%
Expected volatility .... 30.61% to 32.51% 31.19% to 32.19% 31.03% to 37.38%
Risk free interest
rate........................ 1.44% to 1.67% 1.20% to 1.33% 0.56% to 1.36%
Expected term, in
years ..................... 4.31 4.31 4.00 to 5.00
The grant date weighted average fair value of the 2.1 million options issued but not vested as of
January 3, 2016 was $6.32. 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 following table summarizes grant date weighted average fair value of options granted and
options forfeited:
Year Ended
January 3,
2016
December 28,
2014
December 29,
2013
Grant date weighted average fair value of
options granted................................................ $ 6.22 $ 10.39 $ 4.27
Grant date weighted average fair value of
options forfeited............................................... $ 5.36 $ 6.79 $ 1.85