Nordstrom, Inc. Notes to Consolidated Financial Statements Stock Options Restricted Stock Units Nordstrom, Inc. and subsidiaries 57 Beginning in the quarter ended May 3, 2014, we grant our employees a combination of restricted stock units and stock options. In 2014,  restricted stock units granted to employees were approved by the Compensation Committee of our Board of Directors, and are determined  based upon a percentage of the recipients’ base salaries’ and the fair value of the restricted stock units. Restricted stock units typically vest  over four years.  The aggregate intrinsic value of options exercised during 2014, 2013 and 2012 was $89, $89 and $90. The total fair value of stock options  vested during 2014, 2013 and 2012 was $39, $34 and $32. As of January 31, 2015, the total unrecognized stock-based compensation  expense related to nonvested stock options was $49, which is expected to be recognized over a weighted-average period of 27 months. A summary of stock option activity (excluding Trunk Club) for 2014 is presented below: The weighted-average fair value per option at the grant date was $16, $14 and $15 in 2014, 2013 and 2012. In 2014, 2013 and 2012, stock  option awards to employees were approved by the Compensation Committee of our Board of Directors and their exercise price was set at  $61, $54 and $53, the closing price of our common stock on March 3, 2014, March 4, 2013 and February 22, 2012 (the dates of grant). The  awards are determined based upon a percentage of the recipients’ base salaries’ and the fair value of the stock options. Options vest over  four years, and expire 10 years after the date of grant. In 2014, we awarded stock options to 1,799 employees, compared with 1,625 and  1,477 employees in 2013 and 2012. We used the following assumptions to estimate the fair value for stock options at grant date: Dollar and share amounts in millions except per share, per option and per unit amounts Fiscal year 2014 2013 2012 Risk-free interest rate:  Represents the yield on U.S. Treasury zero-coupon securities that  mature over the 10-year life of the stock options. 0.2% – 2.6% 0.2% – 1.8% 0.3% – 2.0% Weighted-average volatility:  Based on a combination of the historical volatility of our common  stock and the implied volatility of exchange-traded options for our common stock. 30.1% 31.8% 36.5% Weighted-average expected dividend yield:  Our forecasted dividend yield for the next 10  years. 2.2% 2.0 % 2.1 % Expected life in years:  Represents the estimated period of time until option exercise. The  expected term of options granted was derived from the output of the Binomial Lattice option  valuation model and was based on our historical exercise behavior, taking into consideration  the contractual term of the option and our employees’ expected exercise and post-vesting  employment termination behavior. 6.8 6.7 6.1 Fiscal year 2014 Shares Weighted- average exercise price Weighted-average remaining  contractual life (years) Aggregate  intrinsic  value  Outstanding, beginning of year 13.8 $43 Granted 1.9 61 Exercised (3.1) 40 Forfeited or cancelled (0.3) 55 Outstanding, end of year 12.3 $47 6 $362 Options exercisable at end of year 6.2 $39 5 $232 Options vested or expected to vest at end of year 11.9 $46 6 $353