Best Buy 2006 Annual Report Download - page 87

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$ in millions, except per share amounts
73
PART II
shareholder return (TSR) compared with the TSR of
companies that comprise the S&P 500 (market-based), or
upon the achievement of company or personal
performance goals (performance-based). Time-based share
awards vest over a period of at least three years, during
which no more than 25% may vest at the time ofthe award,
and no more than 25% may vest on each anniversary date
thereafter. Stock-based compensationexpense associated
withour performance-based and time-based share awards
is not significant.
We also have an employee stock purchase plan which
permits employees to purchase stock at 85% of the market
price of ourcommon stock at the beginning or at the end of
the semi-annual purchase period, whichever is less.
Non-Qualified Stock Options
Non-qualified stock option activity for fiscal 2006 was as follows:
Non-Qualified
Stock
Options
Weighted-
Average
Exercise Price
per Share
Weighted-
Average
Remaining
Contractual
Term (in years)
Aggregate
Intrinsic Value
Outstanding on February 26, 2005 37,752,000 $ 2 8.43
Granted 5,752,00046.04
Exercised(9,804,000) 26.42
Forfeited/Canceled (1,366,000) 34.22
Outstanding on February 25, 2006 32,334,000 $ 3 1.93 6.57 $ 715
Exercisable on February 25, 2006 19,576,000 $26.60 5.22 $ 5 37
The weighted-average grant-date fair value of non-qualified
stock options granted during fiscal 2006, 2005 and 2004
was $18.54, $14.18 and $20.62, respectively, per share.
The aggregate intrinsic value of our non-qualified stock
options (the amount by which the market price of the stock
on the date of exercise exceeded the exercise price of the
option) exercised during fiscal 2006,2005 and 2004, was
$197, $156 and $111, respectively. At February 25, 2006,
there was $163of unrecognized compensation expense
related to non-qualified stock options thatis expected tobe
recognized over a weighted-average period of 1.4 years.
Priorto fiscal 2006, we usedthe Black-Scholes option-
pricing model to estimate the fair value of each non-
qualified stock option.For grants subsequent to our
adoption of SFAS No. 123(R), we estimate the fairvalue of
each non-qualified stock option usinga lattice model.We
believe the lattice model more accurately estimates stock-
based compensation expense as it incorporates additional
variables, including historical exercise behavior.