12. Stock-based compensation

The Company measures all stock-based payments at fair value and recognizes related expense within operating expenses in the consolidated statements of operations over the requisite service period (generally the vesting period). During fiscal 2015, 2014, and 2013, the Company recorded stock-based compensation expense of $62.0 million, $45.9 million and $43.7 million, respectively, for all forms of stock-based compensation awards.

Stock plan

At June 27, 2015, the Company had 9.7 million shares of common stock reserved for stock-based payments, which consisted of 2.0 million shares for unvested or unexercised stock options, 4.8 million shares available for stock-based awards under plans approved by shareholders, 2.6 million shares for restricted stock units and performance shares units granted but not yet vested, and 0.3 million shares available for future purchases under the Company’s Employee Stock Purchase Plan (“ESPP”).

Stock options

Stock option grants have a contractual life of ten years, vest in 25% increments on each anniversary of the grant date, commencing with the first anniversary, and require an exercise price of 100% of the fair market value of common stock at the date of grant. Stock-based compensation expense associated with stock options during fiscal 2015, 2014 and 2013 was $3.6 million, $4.7 million and $4.0 million, respectively.

The fair value of stock options is estimated as of the date of grant using the Black-Scholes model based on the assumptions in the following table. The assumption for the expected term is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on U.S. Treasury rates as of the date of grant with maturity dates approximately equal to the expected term at the grant date. The historical volatility of Avnet’s common stock is used as the basis for the volatility assumption. The Company estimates dividend yield based upon expectations of future dividends as of the grant date.


	Years Ended
	June 27,		June 28,		June 29,
	2015		2014		2013
Expected term (years)	6.0		6.0		6.0
Risk-free interest rate	1.9	%	1.7	%	0.9	%
Weighted average volatility	31.6	%	34.3	%	35.0	%
Dividend yield	1.8	%	1.5	%	—	%

The following is a summary of the changes in outstanding options for fiscal 2015:


		Weighted		Weighted Average
		Average		Remaining
	Shares	Exercise Price		Contractual Life
Outstanding at June 28, 2014	1,809,176	$	30.84	81 Months
Granted	331,048		41.07	110 Months
Exercised	(124,846)		24.65	36 Months
Forfeited or expired	—		—	—
Outstanding at June 27, 2015	2,015,378	$	32.90	71 Months
Exercisable at June 27, 2015	1,079,878	$	29.10	54 Months

The weighted-average grant-date fair values of stock options granted during fiscal 2015, 2014 and 2013 were $11.68, $11.45 and $11.33, respectively.

At June 27, 2015, the aggregate intrinsic value of all outstanding stock option awards was $18.5 million and all exercisable stock option awards was $14.0 million.

The following is a summary of the changes in non-vested stock options for the fiscal year ended June 27, 2015:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Non-vested stock options at June 28, 2014	988,656	$	10.86
Granted	331,048		11.68
Vested	(384,204)		10.37
Forfeited	—		—
Non-vested stock options at June 27, 2015	935,500	$	11.35

As of June 27, 2015, there was $2.9 million of total unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.1 years. The total fair value of stock options vested, as of the vesting dates, during fiscal 2015, 2014 and 2013 were $4.0 million, $3.7 million and $3.4 million, respectively.

Cash received from stock option exercises during fiscal 2015, 2014 and 2013 totaled $2.6 million, $4.7 million, and $2.1 million, respectively. The impact of these cash receipts is included in “Other, net” as financing activity in the accompanying consolidated statements of cash flows.

Restricted stock units

Delivery of restricted stock units, and the associated compensation expense, is recognized over the vesting period and is generally subject to the employee’s continued service and employment by the Company, except for employees who are retirement eligible under the terms of the restricted stock units. As of June 27, 2015, 1.9 million shares previously awarded have not yet vested. Stock-based compensation expense associated with restricted stock units was $50.5 million, $34.4 million and $26.8 million for fiscal years 2015, 2014 and 2013, respectively.

The following is a summary of the changes in non-vested restricted stock units for the fiscal year ended June 27, 2015:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Non-vested restricted stock units at June 28, 2014	2,001,887	$	33.60
Granted	1,107,134		39.60
Vested	(1,076,621)		33.59
Forfeited	(102,048)	$	35.09
Non-vested restricted stock units at June 27, 2015	1,930,352	$	36.15

As of June 27, 2015, there was $45.2 million of total unrecognized compensation expense related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 1.9 years. The total fair value of restricted stock units vested during fiscal 2015, 2014 and 2013 was $36.2 million, $30.5 million and $25.4 million, respectively.

Performance shares units

Eligible employees, including Avnet’s executive officers, may receive a portion of their long-term stock-based compensation through the performance share program, which allows for the vesting of shares based upon achievement of certain market and performance-based criteria (“Performance Share Program”). The Performance Share Program provides for the vesting to each grantee of a number of shares of Avnet’s common stock at the end of a three-year performance period based upon the Company’s achievement of certain performance goals established by the Compensation Committee of the Board of Directors for each Performance Share Program three-year performance period. The performance goals consist of measures of economic profit and total shareholder return.

During fiscal 2015, 2014 and 2013, the Company granted 0.2 million, 0.2 million and 0.3 million performance share units, respectively, of which none have been forfeited. The actual amount of performance shares units vested at the end of each three-year period is measured based upon the actual level of achievement of the defined performance goals and can range from 0% to 200% of the award grant. During fiscal 2015, 2014 and 2013, the Company recognized stock-based compensation expense associated with the Performance Share Program of $6.8 million, $5.8 million and $11.9 million, respectively.

Director stock-based compensation

Non-employee directors are awarded shares equal to a fixed dollar amount of Avnet common stock each year as part of their director compensation. Directors may elect to receive this compensation in the form of common stock or they may elect to defer their compensation to be paid in common stock at a later date. During fiscal 2015, 2014 and 2013, compensation expense associated with the outside director stock-based compensation awards was $1.1 million, $1.0 million and $1.0 million, respectively.

Employee stock purchase plan

The Company has an Employee Stock Purchase Plan (“ESPP”) under the terms of which eligible employees of the Company are allowed to purchase shares of common stock at a price equal to 95% of the fair market value on the last day of each monthly offering period. The ESPP is not compensatory for accounting purposes based on its terms.