Sprouts Farmers Market 2015 Annual Report Download - page 99

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91
Expected volatility is calculated based upon historical volatility data from a group of comparable
companies and the Company 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 December 28, 2014.................. 6,884,997 $ 5.82
Granted ............................................................. 2,435,655 22.56
Forfeited............................................................ (144,225)18.30
Exercised .......................................................... (1,773,518) 3.56 $ 53,373
Outstanding at January 3, 2016........................ 7,402,909 11.63 4.10 $116,336
Exercisable—January 3, 2016.......................... 5,286,752 7.11 3.16 $106,012
Vested/Expected to vest—January 3, 2016 ..... 7,268,675 11.43 4.06 $115,690
RSUs
In the event of a change in control as defined in the award agreements issued under the 2013
Incentive Plan, all RSUs granted prior to 2015 become immediately vested.
RSUs granted in 2015 only become immediately vested in the event of a change in control (as
defined in the applicable team member award agreement) if the awards are not continued or assumed by
the acquiror on a substantially equivalent basis. If the 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 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 RSU vesting are newly issued shares.
The estimated fair value of RSUs granted during 2015 and 2014 range from $20.98 to $39.01, and
were calculated based on the closing price on the grant date.
The total grant date fair value of RSUs granted during 2015 was $3.3 million. The total grant date
fair value of RSUs released upon vesting during 2015 was $1.5 million. There were no RSUs released
during 2014. The total grant date fair value of RSUs forfeited during 2015 was $0.7 million. The grant date
weighted average fair value of the 0.1 million RSUs issued but not released as of January 3, 2016 was
$5.0 million.
The total grant date fair value of RSUs granted during 2014 was $4.3 million. There were no RSUs
released during 2014. The total grant date fair value of RSUs forfeited during 2014 was $0.3 million. The
grant date weighted average fair value of the 0.1 million RSUs issued but not released as of December
28, 2014 was $4.0 million.