Toro 2012 Annual Report Download - page 64
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Please find page 64 of the 2012 Toro annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The fair value of each stock option is estimated on the date of The table below summarizes the activity during fiscal 2012 for
grant using the Black-Scholes valuation method with the assump- unvested restricted share awards:
tions noted in the table below. The expected life is a significant
assumption as it determines the period for which the risk-free inter- Weighted-
Average Fair
est rate, volatility, and dividend yield must be applied. The
Restricted Value at Date
expected life is the average length of time that officers, other Stock of Grant
employees, and non-employee members of the Board of Directors
Unvested as of October 31, 2011 107,438 $26.52
are expected to exercise their stock options, which is based on Granted 48,524 33.61
historical experience. Separate groups of employees that have Vested (38,950) 24.84
similar historical exercise behavior are considered separately for Forfeited (2,098) 29.81
valuation purposes. Expected volatilities are based on the move- Unvested as of October 31, 2012 114,914 $30.02
ment of the company’s common stock over the most recent histori-
As of October 31, 2012, there was $1,742 of total unrecognized
cal period equivalent to the expected life of the option. The risk-
compensation expense related to unvested restricted stock awards.
free interest rate for periods within the contractual life of the option
That cost is expected to be recognized over a weighted-average
is based on the U.S. Treasury rate over the expected life at the
period of 2.2 years.
time of grant. Dividend yield is estimated over the expected life
based on the company’s dividend policy, historical cash dividends Performance Share Awards. The company grants performance
paid, expected future cash dividends, and expected changes in the share awards to executive officers and other employees under
company’s stock price. which they are entitled to receive shares of the company’s com-
The following table illustrates the valuation assumptions of stock- mon stock contingent on the achievement of performance goals of
based compensation for the following fiscal years: the company, which are generally measured over a three-year
period. The number of shares of common stock a participant
Fiscal years ended October 31 2012 2011 2010 receives will be increased (up to 200 percent of target levels) or
Expected life of option in years 6 66 reduced (down to zero) based on the level of achievement of per-
Expected volatility 34.87% – 35.02% 33.34% – 33.43% 33.00% – 33.10% formance goals and will vest at the end of a three-year period.
Weighted-average volatility 35.01% 33.42% 33.00% Performance share awards are granted on an annual basis in the
Risk-free interest rate 1.20% 1.72% – 2.36% 2.51% – 2.87%
Expected dividend yield 1.31% – 1.40% 1.04% – 1.16% 1.52% – 1.68% first quarter of the company’s fiscal year. Compensation expense
Weighted-average dividend yield 1.32% 1.05% 1.54% is recognized for these awards on a straight-line basis over the
Weighted-average fair value at vesting period based on the per share fair value as of the date of
date of grant $8.56 $10.15 $6.16 grant and the probability of achieving performance goals.
The company granted performance share awards as follows:
Restricted Stock Awards. Under the company’s incentive plan,
restricted stock awards are generally granted to certain non-officer
Fiscal years ended October 31 2012 2011 2010
employees. Restricted stock awards vest one-third each year over
Weighted-average fair value at date of grant $28.24 $31.76 $20.37
a three-year period or vest in full on the three-year anniversary of
Fair value of performance share awards vested 1,828 1,429 798
the date of grant, or longer. Compensation expense equal to the
grant date fair value, which is equal to the closing price of the The table below summarizes the activity during fiscal 2012 for
company’s common stock on the date of grant multiplied by the unvested performance share awards:
number of shares subject to the restricted stock award, is recog-
nized for these awards over the vesting period. Weighted-
The company granted restricted stock awards during the follow- Average Fair
Performance Value at Date
ing fiscal years as follows:
Shares of Grant
Unvested as of October 31, 2011 637,996 $20.88
Fiscal years ended October 31 2012 2011 2010
Granted 202,400 28.24
Weighted-average fair value at date of grant $33.61 $27.17 $28.25 Vested (64,268) 14.31
Fair value of restricted stock awards vested 967 37 – Forfeited (192,796) 14.31
Unvested as of October 31, 2012 583,332 $26.33
As of October 31, 2012, there was $3,222 of total unrecognized
compensation expense related to unvested performance share
awards. That cost is expected to be recognized over a weighted-
average period of 1.6 years.
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