Toro 2015 Annual Report Download - page 67

The table below presents stock option activity for fiscal 2015: The table below illustrates the valuation assumptions of stock-
based compensation for the following fiscal years:
Weighted- Weighted-
Stock Average Average Fiscal years ended October 31 2015 2014 2013
Option Exercise Contractual Intrinsic
Expected life of option in years 5.94 66
Awards Price Life(years) Value
Expected stock price volatility 29.66% 34.29% 35.19%
Outstanding as of Risk-free interest rate 1.61% 1.92% 0.88%
October 31, 2014 3,049,652 $29.04 5.4 $ 99,713 Expected dividend yield 1.29% 1.25% 1.07%
Granted 292,013 62.74 Weighted-average fair value at date of grant $16.81 $18.69 $13.03
Exercised (410,428) 22.23
Cancelled/forfeited (16,145) 60.98 Restricted Stock and Restricted Stock Units. Under the 2010
Expired (371) 59.50 plan, restricted stock and restricted stock unit awards are generally
Outstanding as of granted to certain employees that are not executive officers. Occa-
October 31, 2015 2,914,721 $33.21 5.2 $122,606 sionally, restricted stock or restricted stock unit awards may be
Exercisable as of granted, including to executive officers, in connection with hiring,
October 31, 2015 2,309,155 $26.92 4.4 $111,644 mid-year promotions, leadership transition, or retention. Restricted
stock and restricted stock units generally vest one-third each year
As of October 31, 2015, there was $1,769 of total unrecognized
over a three-year period, or vest in full on the three-year anniver-
compensation expense related to unvested stock options. That
sary of the date of grant. Such awards may have performance-
cost is expected to be recognized over a weighted-average period
based rather than time-based vesting requirements. Compensation
of 1.86 years.
expense equal to the grant date fair value, which is equal to the
The table below presents the total market value of stock options
closing price of the company’s common stock on the date of grant
exercised and the total intrinsic value of options exercised during
multiplied by the number of shares subject to the restricted stock
the following fiscal years:
and restricted stock units, is recognized for these awards over the
vesting period.
Fiscal years ended October 31 2015 2014 2013
Factors related to the company’s restricted stock and restricted
Market value of stock options exercised $27,860 $19,017 $23,160 stock units during the following fiscal years are as follows:
Intrinsic value of options exercised
1
18,739 12,311 13,875
1
Intrinsic value is calculated as amount by which the stock price at exercise date
Fiscal years ended October 31 2015 2014 2013
exceeded the option exercise price
Weighted-average fair value at date of grant $67.77 $63.05 $46.10
The fair value of each stock option is estimated on the date of Fair value of restricted stock and restricted
grant using the Black-Scholes valuation method with the assump- stock units vested 1,702 1,890 1,207
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 2015 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 executive
officers, other employees, and non-employee directors are Weighted-
expected to exercise their stock options, which is primarily based Restricted Average Fair
Stock and Value at Date
on historical experience. Separate groups of employees that have
Units of Grant
similar historical exercise behavior are considered separately for
valuation purposes. Expected volatilities are based on the move- Unvested as of October 31, 2014 78,529 $49.22
Granted 55,180 67.77
ment of the company’s common stock over the most recent histori-
Vested (39,457) 43.15
cal period equivalent to the expected life of the option. The Forfeited (2,455) 56.72
risk-free interest rate for periods within the contractual life of the
Unvested as of October 31, 2015 91,797 $62.78
option is based on the U.S. Treasury rate over the expected life at
the time of grant. Dividend yield is estimated over the expected life As of October 31, 2015, there was $3,518 of total unrecognized
based on the company’s historical cash dividends paid, expected compensation expense related to unvested restricted stock units.
future cash dividends and dividend yield, and expected changes in That cost is expected to be recognized over a weighted-average
the company’s stock price. period of 2.43 years.
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