Starbucks 2014 Annual Report Download - page 76

72 Starbucks Corporation 2014 Form 10-K
Note 12: Employee Stock and Benefit Plans
We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options,
restricted stock, restricted stock units ("RSUs"), or stock appreciation rights to employees, non-employee directors and
consultants. We issue new shares of common stock upon exercise of stock options and the vesting of RSUs. We also have an
employee stock purchase plan ("ESPP").
As of September 28, 2014, there were 56.0 million shares of common stock available for issuance pursuant to future equity-
based compensation awards and 7.4 million shares available for issuance under our ESPP.
Stock-based compensation expense recognized in the consolidated financial statements (in millions):
Fiscal Year Ended Sep 28, 2014 Sep 29, 2013 Sep 30, 2012
Options $ 41.8 $ 37.1 $ 46.2
RSUs 141.4 105.2 107.4
Total stock-based compensation expense recognized in the
consolidated statements of earnings $ 183.2 $ 142.3 $ 153.6
Total related tax benefit $ 63.4 $ 49.8 $ 54.2
Total capitalized stock-based compensation included in net
property, plant and equipment and inventories on the consolidated
balance sheets $ 1.9 $ 1.8 $ 2.0
Stock Option Plans
Stock options to purchase our common stock are granted at the fair value of the stock on the grant date. The majority of options
become exercisable in four equal installments beginning a year from the grant date and generally expire 10 years from the grant
date. Options granted to non-employee directors generally vest over one to three years. Nearly all outstanding stock options are
non-qualified stock options.
The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions for
fiscal years 2014, 2013, and 2012:
Employee Stock Options
Granted During the Period
Fiscal Year Ended 2014 2013 2012
Expected term (in years) 4.5 4.8 4.8
Expected stock price volatility 26.8% 34.0% 38.2%
Risk-free interest rate 1.1% 0.7% 1.0%
Expected dividend yield 1.3% 1.6% 1.5%
Weighted average grant price $ 80.23 $ 51.23 $ 44.26
Estimated fair value per option granted $ 16.72 $ 12.88 $ 12.79
The expected term of the options represents the estimated period of time until exercise, and is based on historical experience of
similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior.
Expected stock price volatility is based on a combination of historical volatility of our stock and the one-year implied volatility
of Starbucks traded options, for the related vesting periods. The risk-free interest rate is based on the implied yield available on
US Treasury zero-coupon issues with an equivalent remaining term. The dividend yield assumption is based on our anticipated
cash dividend payouts. The amounts shown above for the estimated fair value per option granted are before the estimated effect
of forfeitures, which reduce the amount of expense recorded in the consolidated statements of earnings.