Urban Outfitters 2012 Annual Report Download - page 75

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Table of Contents
URBAN OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data)
exercise rate to vary over time reflecting a more realistic pattern of economic and behavioral occurrences. The Company uses historical data on exercise
timing to determine the expected life assumption. The risk-free rate of interest for periods within the contractual life of the award is based on U.S.
Government Securities Treasury Constant Maturities over the expected term of the equity instrument. The expected volatility is based on a weighted average
of the implied volatility and the Company's most recent historical volatility.
Based on the Company's historical experience, it has assumed an annualized forfeiture rate of 5% for its non-vested share based awards granted during
the fiscal years ended January 31, 2012 and 2011. For share based awards granted in previous years that remain non-vested, an annualized forfeiture rate of
2% has been assumed. The Company will record additional expense if the actual forfeiture rate is lower than it estimated, and will record a recovery of prior
expense if the actual forfeiture is higher than estimated.
Share based compensation expense, included in the Consolidated Statements of Income, for the fiscal years ended January 31, 2012, 2011 and 2010 was
as follows:
Fiscal Year Ended January 31,
2012 2011 2010
Stock Options $ 2,886 $ 4,331 $ 2,975
Stock Appreciation Rights 1,111 463 —
Performance Share Units (1) (959) 5,929 1,349
Restricted Shares 30 2 442
Total $ 3,068 $ 10,725 $ 4,766
(1) Includes the reversal of $8,800 of previously recognized compensation expense in fiscal 2012, related to 1,054,466 PSU's, granted to a former executive
officer of the Company, that will not vest due to the service requirement not being met.
Stock Options
The Company grants stock options which generally vest over a period of three to five years. Stock options become exercisable over the vesting period
in installments determined by the administrator, which can vary depending upon each individual grant. Stock options granted to non-employee directors
generally vest over a period of one year. The following weighted average assumptions were used in the Model to estimate the fair value of stock options at the
date of grant:
Fiscal
2012
Fiscal
2011
Fiscal
2010
Expected life, in years 3.5 4.3 4.2
Risk-free interest rate 0.9% 1.8% 2.0%
Volatility 50.0% 49.9% 51.4%
Dividend rate — — —
F-24