Cabela's 2011 Annual Report Download - page 107

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
statements of income. Compensation cost for awards is recognized using a straight-line amortization method over
the vesting period. At December 31, 2011, the total unrecognized deferred share-based compensation balance for
all equity awards issued, net of expected forfeitures, was $9,591, net of tax, which is expected to be amortized over
a weighted average period of 1.8 years.
The fair value of options granted is estimated on the date of the grant using the Black-Scholes option pricing
model. The expected volatility for 2011, 2010, and 2009 was based on the historical volatility of the Company’s
common stock. The fair value of options in the years presented was estimated using the Black-Scholes model with
the following weighted average assumptions:
2011 2010 2009
Risk-free interest rate based on the U.S. Treasury yield curve 1.52 to 2.16% 2.26 to 2.35% 1.86 to 2.48%
Dividend yield - - -
Expected volatility 46% 45 to 46% 45 to 46%
Weighted average expected life (in years) 5.0 5.0 5.0
Weighted average grant date fair value of options granted $ 11.30 $ 7.02 $ 7.94
Employee Stock Plans – The Cabela’s Incorporated 2004 Stock Plan (“the 2004 Plan”) provides for the
granting of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock,
restricted stock units, and other stock-based awards to employees, directors, and consultants. Options granted
under the 2004 Plan have a term of no greater than ten years from the grant date and are exercisable in accordance
with the vesting schedule determined at the time the awards are granted. As of December 31, 2011, there were
5,085,080 awards outstanding and 2,682,550 additional shares authorized and available for grant under the 2004
Plan. To the extent available, the Company intends to issue its treasury shares for the exercise of stock options
before issuing new shares. The Company also has 106,048 shares (all incentive stock options) subject to options
under the 1997 Stock Option Plan (“the 1997 Plan”) with no shares available for grant. Options issued expire on the
fifth or the tenth anniversary of the date of the grant under the 1997 Plan.
Option Awards. During 2011, there were 229,970 options granted to employees at a weighted average exercise
price of $26.74 per share and 18,000 options granted to non-employee directors at an exercise price of $23.85
per share. These options have an eight-year term and vest over three years for employees and one year for non-
employee directors.
Nonvested Stock and Stock Unit Awards.During 2011, the Company issued 390,300 units of nonvested
stock under the 2004 Plan to employees at a weighted average fair value of $26.70 per unit. These nonvested stock
units vest evenly over three years on the grant date anniversary based on the passage of time. On March 2, 2011,
the Company also issued 66,000 units of performance-based restricted stock units under the 2004 Plan to certain
executives at a fair value of $26.89 per unit. These performance-based restricted stock units will begin vesting in
three equal installments on March 2, 2012, since the performance goal for 2011 was achieved.
Restricted Stock Awards. On July 7, 2008, 111,324 shares of restricted stock were issued to two executives
under the 2004 Plan. The stock price on the date of grant was $10.48 per share resulting in a fair value of $1,167 of
deferred compensation which is being amortized to compensation expense over a five-year period. Compensation
expense related to these restricted stock awards totaled $233, $233, and $233 in 2011, 2010, and 2009, respectively,
and is included in total share-based compensation expense. The restricted stock vests one-third on the third, fourth,
and fifth anniversaries of the grant date.