Stein Mart 2014 Annual Report Download - page 43

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-19
The fair value of each stock option granted during 2014, 2013 and 2012 was estimated at the date of grant using the Black-Scholes
options pricing model with the following weighted-average assumptions:
2014 2013 2012
Expected term 4.4-5.3 years 5.2 years 4.1-5.3 years
Risk-free interest rate 1.5% to 1.8% 1.8% 0.9%
Volatility 43.6%-52.9% 64.4% 62.9% - 70.8%
Dividend yield 2.2%-2.5% 1.4% 0%
The expected volatility is based on the historical volatility of our stock price over assumed expected terms. The risk-free interest rate is
estimated from yields of U.S. Treasury instruments of varying maturities with terms consistent with the expected terms of the options. The
expected term of an option is calculated from a lattice model using historical employee exercise data.
In December 2012, as a result of paying a special cash dividend, all outstanding stock options were modified to decrease the exercise
price and increase the number of options in order to maintain the original grant fair value. No incremental stock compensation expense
resulted from the modification. See Note 13 regarding the February 2015 special cash dividend discussion.
Restricted Stock and Performance Share Awards
We have issued restricted stock and performance share awards to eligible Key Employees, Non-Employee Directors, and Advisor
Participants, as defined in the Omnibus Plan. All restricted stock awards have restriction periods tied primarily to employment, and all
performance share awards have vesting tied to market-based performance and service. Shares awarded under the Omnibus Plan entitle
the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged or
otherwise disposed of during the restriction period. Vesting for most awards is based on the service period and vesting generally occurs
between two and three years following the date of grant. Unvested shares are forfeited upon termination of employment. The total value
of share-based compensation expense for restricted stock is based on the closing price of our common stock on the date of grant. The fair
value of the market-based performance share awards was determined using a Monte-Carlo simulation model. Performance share awards
provide the right to receive a share award at the end of a specified period in which a performance goal based on total shareholder return
has been established.
The following table summarizes non-vested stock activity for the years ended February 1, 2014 and January 31, 2015, respectively (shares
in thousands):
Weighted- Weighted-
A
verage
A
verage
G
rant Date
G
rant Date
S
hares Fair Value
S
hares Fair Value
Non-vested at February 1, 2014 955 8.54$ 1,023 10.09$
Granted30913.3960315.92
Vested (426) 6.69 (1,028) 8.32
Cancelled or forfeited (100) 8.82 (58) 10.04
Non-vested at January 31, 2015 738 11.59$ 540 15.28$
Total unrecognized compensation cost 5,149$ 4,923$
Weighted-average expected life remaining 1.1 years 0.9 years
Performance Share AwardsRestricted Stock Awards
The total fair value of restricted stock vested was $2.9 million, $2.8 million and $2.3 million 2014, 2013, and 2012, respectively. The total
fair value of performance awards vested was $8.6 million, $0 and $2.6 million during 2014, 2013 and 2012, respectively.