Form S-1 Table of Contents Blue Buffalo Pet Products, Inc. Notes to Consolidated Financial Statements (Continued) The Company uses a third party valuation specialist to assist it in the estimation of the fair value of its common stock. The Company believes these valuations to be appropriate; however, the valuation of the equity of any private company involves various estimates and assumptions that may differ from actual values. If available. the Company bases its common stock value on actual transactions or o01er transactions that are representative of stock value. The expected volatility assumption is based on the combination of the industry index for pct food wholesalers and the volatility of the Company's largest customer. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury implied yield at the date of grant. The weighted-average expected tam is determined with reference to historical exercise and pod-vesting cancellation experience, and the vesting period and contractual term of the awards. The following are the weighted-average assumptions used for grants issued under the Plan: December 31, 2012 For the years ended December 31, 2013 December 31, 2014 Volatility 30.64% 30.88% 32.84% Risk-free interest rate 1.13% 1.52% 2.16% Expected term (years) 6.5 6.5 6.5 Dividend yield — — — Grant-date fair value $ 7.60 $ 9.00 $ 21.62 The following table summarizes stock-based award activity during the year and also presents stock options outstanding and exercisable as of December 31, 2014 (dollars in millions, except for per share data): Number of Mares Weighted Menge Eserdse Price Per Share Weighted As trout Remaining Contractual Life Aggregate Intrinsic Value Outstanding, December 31,2013 1,104,995 $ 23.51 8.98 Granted 37,000 $ 58.00 9.22 Exercised (5,300) $ 7.04 7.17 Forfeited (21,400) $ 25.64 8.13 Expired (3,000) $ 23.50 7.96 Outstanding. December 3