|
|
 | | | |
- close
- close
- close
- close
These excerpts taken from the GWW 10-K filed Feb 27, 2009. Stock
Incentive Plans. Grainger maintains stock incentive plans
under which a variety of incentive grants may be awarded to employees and
directors. Grainger uses a binomial lattice option pricing model to estimate the
value of stock option grants. The model requires projections of the risk-free
interest rate, expected life, volatility, expected dividend yield and forfeiture
rate of the stock option grants. The fair value estimate of options granted used
the following assumptions:
The risk-free
interest rate is selected based on yields from U.S. Treasury zero-coupon issues
with a remaining term approximately equal to the expected term of the options
being valued. The expected life selected for options granted during each year
presented represents the period of time that the options are expected to be
outstanding based on historical data of option holders exercise and termination
behavior. Expected volatility is based upon implied and historical volatility of
the closing price of Grainger’s stock over a period equal to the expected life
of each option grant. The dividend yield assumption is based on history and
expectation of dividend payouts. Because stock option compensation expense is
based on awards ultimately expected to vest, it has been reduced for estimated
forfeitures, using historical forfeiture experience.
The
amount of stock option compensation expense is significantly affected by the
valuation model and these assumptions. If a different valuation model or
different assumptions were used, the stock option compensation expense could be
significantly different from what is recorded in the current
period.
Compensation expense
for other stock-based awards is based upon the closing market price on the last
trading date preceding the date of the grant.
For
additional information concerning stock incentive plans, see Note 12 to the
Consolidated Financial Statements.
Stock Incentive Plans. Grainger maintains stock incentive plans under which a variety of incentive grants may be awarded to employees and directors. Grainger uses a binomial lattice option pricing model to estimate the value of stock option grants. The model requires projections of the risk-free interest rate, expected life, volatility, expected dividend yield and forfeiture rate of the stock option grants. The fair value estimate of options granted used the following assumptions:
The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the options being valued. The expected life selected for options granted during each year presented represents the period of time that the options are expected to be outstanding based on historical data of option holders exercise and termination behavior. Expected volatility is based upon implied and historical volatility of the closing price of Grainger’s stock over a period equal to the expected life of each option grant. The dividend yield assumption is based on history and expectation of dividend payouts. Because stock option compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, using historical forfeiture experience. The amount of stock option compensation expense is significantly affected by the valuation model and these assumptions. If a different valuation model or different assumptions were used, the stock option compensation expense could be significantly different from what is recorded in the current period. Compensation expense for other stock-based awards is based upon the closing market price on the last trading date preceding the date of the grant. For additional information concerning stock incentive plans, see Note 12 to the Consolidated Financial Statements. These excerpts taken from the GWW 10-K filed Feb 27, 2008. Stock Incentive Plans. Grainger maintains stock incentive plans under which a variety of incentive grants may be awarded to employees and directors. Grainger uses a binomial lattice option pricing model to estimate the value of stock option grants. The model requires projections of the risk-free interest rate, expected life, volatility, expected dividend yield and forfeiture rate of the stock option grants. The fair value of options granted in 2007 and 2006 used the following assumptions:
The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the options being valued. The expected life selected for options granted during each year presented represents the period of time that the options are expected to be outstanding based on historical data of option holders exercise and termination behavior. Expected volatility is based upon implied and historical volatility of the closing price of Grainger’s stock over a period equal to the expected life of each option grant. The dividend yield assumption is based on history and expectation of dividend payouts. Because stock option compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, using historical forfeiture experience.
The amount of stock option compensation expense is significantly affected by the valuation model and these assumptions. If a different valuation model or different assumptions were used, the stock option compensation expense could be significantly different from what is recorded in the current period.
Compensation expense for other stock-based awards is based upon the closing market price on the last trading date preceding the date of the grant.
For additional information concerning stock incentive plans, see Note 12 to the Consolidated Financial Statements.
Stock Incentive Plans. Grainger maintains stock incentive plans under which a variety of incentive grants may be awarded to employees and directors. Grainger uses a binomial lattice option pricing model to estimate the value of stock option grants. The model requires projections of the risk-free interest rate, expected life, volatility, expected dividend yield and forfeiture rate of the stock option grants. The fair value of options granted in 2007 and 2006 used the following assumptions:
The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the options being valued. The expected life selected for options granted during each year presented represents the period of time that the options are expected to be outstanding based on historical data of option holders exercise and termination behavior. Expected volatility is based upon implied and historical volatility of the closing price of Grainger’s stock over a period equal to the expected life of each option grant. The dividend yield assumption is based on history and expectation of dividend payouts. Because stock option compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, using historical forfeiture experience.
The amount of stock option compensation expense is significantly affected by the valuation model and these assumptions. If a different valuation model or different assumptions were used, the stock option compensation expense could be significantly different from what is recorded in the current period.
Compensation expense for other stock-based awards is based upon the closing market price on the last trading date preceding the date of the grant.
For additional information concerning stock incentive plans, see Note 12 to the Consolidated Financial Statements.
| EXCERPTS ON THIS PAGE:
RELATED TOPICS for GWW: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||
