Toro 2014 Annual Report Download - page 67

holder must be employed as of the end of the fiscal year in which company’s historical cash dividends paid, expected future cash div-
the options are granted in order for the options to continue to vest idends and dividend yield, and expected changes in the company’s
following retirement. Similarly, if a non-employee director has stock price.
served on the company’s Board of Directors for ten full fiscal years The table below illustrates the valuation assumptions of stock-
or more, the fair value of the options granted is fully expensed on based compensation for the following fiscal years:
the date of the grant.
The table below presents stock option activity for fiscal 2014: Fiscal years ended October 31 2014 2013 2012
Expected life of option in years 6 66
Expected volatility 34.28% – 34.42% 35.18% – 35.19% 34.87% – 35.02%
Weighted- Weighted- Weighted-average volatility 34.29% 35.19% 35.01%
Stock Average Average Risk-free interest rate 1.92% 0.88% 1.20%
Option Exercise Contractual Intrinsic Expected dividend yield 1.25% – 1.27% 1.04% – 1.07% 1.31% – 1.40%
Awards Price Life(years) Value Weighted-average dividend yield 1.25% 1.07% 1.32%
Outstanding as of Weighted-average fair value at
October 31, 2013 3,069,778 $25.55 5.9 $102,493 date of grant $18.69 $13.03 $8.56
Granted 288,832 59.45 ——
Exercised (302,266) 22.19 —— Restricted Stock and Restricted Stock Units. Under the plan,
Cancelled (6,692) 59.50 —— restricted stock and restricted stock units are generally granted to
Outstanding as of certain non-officer employees. Occasionally, restricted stock or
October 31, 2014 3,049,652 $29.04 5.4 $ 99,713 restricted stock unit awards may be granted, including to executive
Exercisable as of officers, in connection with hiring, mid-year promotions, leadership
October 31, 2014 2,338,853 $23.98 4.6 $ 88,289 transition, or retention. Restricted stock and restricted stock units
generally vest one-third each year over a three-year period, or vest
As of October 31, 2014, there was $1,855 of total unrecognized in full on the three-year anniversary of the date of grant. Such
compensation expense related to unvested stock options. That awards may have performance-based rather than time-based vest-
cost is expected to be recognized over a weighted-average period ing requirements. Compensation expense equal to the grant date
of 1.9 years. fair value, which is equal to the closing price of the company’s
The table below presents the total market value of stock options common stock on the date of grant multiplied by the number of
exercised and the total intrinsic value of options exercised during shares subject to the restricted stock and restricted stock units, is
the following fiscal years: recognized for these awards over the vesting period.
The company granted restricted stock and restricted stock units
Fiscal years ended October 31 2014 2013 2012 during the following fiscal years as follows:
Market value of stock options exercised $19,017 $23,160 $35,901
Intrinsic value of options exercised 12,311 13,875 16,061
Fiscal years ended October 31 2014 2013 2012
The fair value of each stock option is estimated on the date of Weighted-average fair value at date of grant $63.05 $46.10 $33.61
Fair value of restricted stock and restricted
grant using the Black-Scholes valuation method with the assump-
stock units vested 1,890 1,207 967
tions noted in the table below. The expected life is a significant
assumption as it determines the period for which the risk-free inter- The table below summarizes the activity during fiscal 2014 for
est rate, volatility, and dividend yield must be applied. The unvested restricted stock and restricted stock units:
expected life is the average length of time in which officers, other
employees, and non-employee directors are expected to exercise Weighted-
their stock options, which is primarily based on historical experi- Restricted Average Fair
ence. Separate groups of employees that have similar historical Stock and Value at Date
exercise behavior are considered separately for valuation pur- Units of Grant
poses. Expected volatilities are based on the movement of the Unvested as of October 31, 2013 109,288 $36.32
company’s common stock over the most recent historical period Granted 29,975 63.05
Vested (58,047) 32.43
equivalent to the expected life of the option. The risk-free interest
Forfeited (2,687) 41.93
rate for periods within the contractual life of the option is based on
Unvested as of October 31, 2014 78,529 $49.22
the U.S. Treasury rate over the expected life at the time of grant.
Dividend yield is estimated over the expected life based on the As of October 31, 2014, there was $2,019 of total unrecognized
compensation expense related to unvested restricted stock and
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