Kohl's 2014 Annual Report Download - page 55
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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:
Dividend yield
2.9%
2.6%
Volatility
32.7%
33.7%
Risk-free interest rate
0.9%
1.0%
Expected life in years
5.5
5.5
Weighted average fair value at grant date
$10.68
$11.79
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 2014, 2013, and 2012:
Balance at beginning of year
15,212
$ 53.96
16,564
$ 53.41
Granted
575
47.86
1,458
49.00
Exercised
(2,494)
41.02
(1,718)
40.01
Forfeited/expired
(1,918)
56.59
(1,092)
60.93
Balance at end of year
11,375
$ 56.05
15,212
$ 53.96
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 $30
million in both 2014 and 2013 and $20 million in 2012.
Additional information related to stock options outstanding and exercisable at January 31, 2015, segregated by exercise price range, is summarized
below:
$ 29.09 – $ 46.00
701
1.3
$ 41.84
$ 46.01 – $ 49.00
541
4.6
47.46
$ 49.01 – $ 51.00
910
2.6
50.06
$ 51.01 – $ 55.00
592
3.6
52.90
$ 55.01 – $ 65.00
766
2.4
57.86
$ 65.01 – $ 77.62
1,009
1.6
66.95
4,519
2.5
$ 53.94
Intrinsic value (in thousands)
$ 33,849
The intrinsic value of outstanding and exercisable stock options represents the excess of our closing stock price on January 31, 2015 ($59.72) over the
exercise price multiplied by the applicable number of stock options.
F-16