Kohl's 2012 Annual Report Download - page 56

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-17
7. Stock-Based Compensation (continued)
All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair
value of each option award is estimated using a Black-Scholes option valuation model and the following assumptions as of the
grant date:
2012 2011 2010
Dividend yield................................................................................................ 2.6% 1.8% —
Volatility......................................................................................................... 33.7% 33.1% 33.5%
Risk-free interest rate..................................................................................... 1.0% 2.0% 2.3%
Expected life in years..................................................................................... 5.5 5.5 5.5
Weighted average fair value at grant date...................................................... $11.79 $14.54 $19.07
The dividend yield represents the expected dividends on our stock for the expected term of the option. The expected
volatility assumption is based on the historical volatility of our stock. The risk-free interest rate for periods within the life of the
option is based on a blend of U.S. Treasury bond rates. We use historical data to estimate the expected life of the option and the
period of time that options granted are expected to be outstanding.
The following table summarizes our stock option activity for 2012, 2011, and 2010:
2012 2011 2010
Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price Shares
Weighted
Average
Exercise
Price
(Shares in Thousands)
Balance at beginning of year..................... 16,564 $ 53.41 17,869 $ 53.17 19,848 $ 52.10
Granted...................................................... 1,458 49.00 1,056 52.60 656 54.56
Exercised................................................... (1,718) 40.01 (1,349) 43.12 (1,848) 40.46
Forfeited/expired....................................... (1,092) 60.93 (1,012) 62.07 (787) 57.25
Balance at end of year............................... 15,212 $ 53.96 16,564 $ 53.41 17,869 $ 53.17
The intrinsic value of options exercised represents the excess of our stock price at the time the option was exercised over
the exercise price and was $20 million in 2012, $16 million in 2011 and $25 million in 2010.
Additional information related to stock options outstanding and exercisable at February 2, 2013, segregated by exercise
price range, is summarized below:
Stock Options Outstanding Stock Options Exercisable
Range of Exercise Prices Shares
Weighted
Average
Remaining
Contractual
Life (in
years)
Weighted
Average
Exercise
Price Shares
Weighted
Average
Remaining
Contractual
Life (in
years)
Weighted
Average
Exercise
Price
(Shares in Thousands)
$ 17.00 – $ 35.50............................. 1,027 1.7 $ 31.87 1,019 1.7 31.89
$ 35.51 – $ 38.30............................. 86 2.7 37.42 75 2.7 37.55
$ 38.31 – $ 41.63............................. 1,478 3.2 41.58 760 3.3 41.53
$ 41.64 – $ 45.57............................. 1,154 2.9 43.23 1,022 2.4 43.13
$ 45.58 – $ 50.37............................. 2,738 5.8 48.33 1,622 5.7 48.26
$ 50.38 – $ 51.81............................. 2,045 2.7 51.32 1,752 2.1 51.34
$ 51.82 – $ 66.25............................. 3,415 3.9 57.36 2,293 3.4 58.99
$ 66.26 – $ 75.90............................. 1,109 3.1 68.73 1,109 3.1 68.73
$ 75.91 – $ 77.62............................. 2,160 1.1 75.98 2,160 1.1 75.98
15,212 3.3 $ 53.96 11,812 2.8 55.44
Intrinsic value (in thousands) .......... $ 25,033 $ 21,368