Travelzoo 2015 Annual Report Download - page 114

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71
The Company utilized the Black-Scholes option pricing model to value the stock options granted in 2015, 2013, 2012 and
2009. The Company used an expected life as defined under the simplified method, which is using an average of the contractual
term and vesting period of the stock options. The risk-free interest rate used for the award is based on the U.S. Treasury yield
curve in effect at the time of grant. The historical volatility was calculated based upon implied volatility of the Company's
historical stock prices. The Company used a forfeiture rate of 0%. To the extent the actual forfeiture rate is different from what
we have anticipated, stock-based compensation related to these options will be different from our expectations.
The fair value of 2015, 2013 and 2012 stock options was estimated using the Black-Scholes option pricing model with
the following weighted-average assumptions:
2015 2013 2012
Weighted-average fair value of options granted per share $ 4.42 $ 18.87 $ 19.08
Historical volatility 59% 70% 74%
Risk-free interest rate 1.73% 1.70% 1.11%
Dividend yield ———
Expected life in years 5.75 6.25 6.25
As of December 31, 2015, there was approximately $5,000 of unrecognized stock-based compensation expense related to
outstanding 2012 stock options, expected to be recognized over 0.1 years, and approximately $1.6 million of unrecognized
stock-based compensation expense related to outstanding 2015 stock options, expected to be recognized over 2.0 years. As of
December 31, 2015, there was no unrecognized stock-based compensation expense relating to 2009 and 2013 stock options
grants.
Option activities during the years ended December 31, 2013, 2014, and 2015 were as follows:
Shares Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Life
Aggregate
Intrinsic
Value
(In thousands)
Outstanding at January 1, 2013 400,000 $ 18.47 7.43 years $ 1,206
Options granted 75,000 $ 29.58
Outstanding at December 31, 2013 475,000 $ 20.23 6.93 years $ 1,905
Options forfeited (25,000) $ 28.98
Options canceled (25,000) 28.98
Outstanding at December 31, 2014 425,000 $ 19.20 5.79 years $ —
Option Granted 400,000 8.07
Options canceled (50,000) $ 29.58
Outstanding at December 31, 2015 775,000 $ 12.78 5.53 years $ 120
Exercisable and fully vested at
December 31, 2015 362,500 $ 17.43 0.85 years $ —
Outstanding at December 31, 2015 and
expected to vest thereafter 412,500 $ 8.70 9.64 years
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the
Company’s closing stock price on the last trading day of years ended December 31, 2015, 2014 and 2013 and the exercise
price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option
holders exercised their options on December 31, 2015, 2014, and 2013. This amount changes based on the fair market value of
the Company’s stock. The Company’s policy is to issue shares from the authorized shares to fulfill stock option exercises.