SHARE-BASED COMPENSATION

The Company issues stock appreciation rights and restricted stock units, including those with service, performance and market vesting conditions. The Company recognized share-based compensation expense of $6.0 million and $17.4 million for the thirteen and thirty-nine weeks ended November 1, 2014, respectively, and $13.3 million and $40.2 million for the thirteen and thirty-nine weeks ended November 2, 2013, respectively. The Company also recognized tax benefits related to share-based compensation expense of $2.3 million and $6.6 million for the thirteen and thirty-nine weeks ended November 1, 2014, respectively, and $5.0 million and $15.3 million for the thirteen and thirty-nine weeks ended November 2, 2013, respectively.

Stock Options

The Company did not grant any stock options during the thirty-nine weeks ended November 1, 2014 or November 2, 2013. Below is a summary of stock option activity for the thirty-nine weeks ended November 1, 2014:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life
Outstanding at February 1, 2014	532,400		$	65.37
Granted	—		—
Exercised	(7,500	)	33.74
Forfeited or expired	(25,175	)	68.76
Outstanding at November 1, 2014	499,725		$	65.67	$	803,620	2.0
Stock options exercisable at November 1, 2014	499,725		$	65.67	$	803,620	2.0

The total intrinsic value of stock options which were exercised during the thirty-nine weeks ended November 1, 2014 and November 2, 2013 was insignificant.

No stock options vested during the thirty-nine weeks ended November 1, 2014 or November 2, 2013.

As of November 1, 2014, all compensation cost related to outstanding stock options had been fully recognized.

Stock Appreciation Rights

The following table summarizes stock appreciation rights activity for the thirty-nine weeks ended November 1, 2014:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life
Outstanding at February 1, 2014	8,982,959		$	40.76
Granted	395,300		38.62
Exercised	(92,475	)	26.92
Forfeited or expired	(198,275	)	47.92
Outstanding at November 1, 2014	9,087,509		$	40.65	$	21,081,713	2.8
Stock appreciation rights exercisable at November 1, 2014	8,352,634		$	40.38	$	21,068,363	2.3
Stock appreciation rights expected to become exercisable in the future as of November 1, 2014	666,668		$	43.96	$	10,598	8.6

The Company estimates the fair value of stock appreciation rights using the Black-Scholes option-pricing model. The weighted-average assumptions used in the Black-Scholes option-pricing model for stock appreciation rights granted during the thirty-nine weeks ended ended November 1, 2014 and November 2, 2013, were as follows:



	Executive Officers other than the CEO						All Other Associates
	November 1, 2014			November 2, 2013			November 1, 2014			November 2, 2013
Grant date market price	$	37.85		$	46.57		$	38.58		$	45.46
Exercise price	$	38.44		$	46.57		$	38.79		$	45.46
Fair value	$	14.04		$	20.34		$	13.56		$	16.82
Assumptions:
Price volatility	50		%	61		%	50		%	54		%
Expected term (years)	4.9			4.7			4.1			4.1
Risk-free interest rate	1.6		%	0.7		%	1.4		%	0.6		%
Dividend yield	2.0		%	1.8		%	1.9		%	1.8		%

Compensation expense for stock appreciation rights is recognized on a straight-line basis over the awards’ requisite service period, net of forfeitures. As of November 1, 2014, there was $8.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock appreciation rights. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 16 months.

The total intrinsic value of stock appreciation rights exercised during the thirty-nine weeks ended November 1, 2014 and November 2, 2013 was $1.5 million and $8.5 million, respectively. The grant date fair value of stock appreciation rights that vested during the thirty-nine weeks ended November 1, 2014 and November 2, 2013 was $7.3 million and $25.0 million, respectively.

Restricted Stock Units

The following table summarizes activity for restricted stock units with performance and/or service vesting conditions for the thirty-nine weeks ended November 1, 2014:



	Number of Underlying Shares		Weighted-Average Grant Date Fair Value
Unvested at February 1, 2014	1,426,579		$	46.00
Granted ⁽¹⁾	632,925		34.75
Vested	(352,359	)	48.32
Forfeited	(211,931	)	44.04
Unvested at November 1, 2014	1,495,214		$	40.35


⁽¹⁾	Includes 158,922 shares, which represents "target performance," related to grants of restricted stock units with performance vesting conditions at their targeted vesting amount. The number of shares that ultimately vest can vary from 0% - 200% of target depending on the level of achievement of performance criteria.

The fair value of restricted stock units with performance and/or service vesting conditions is calculated using the market price of the underlying Common Stock on the date of grant reduced for anticipated dividend payments on unvested shares. In determining the fair value, the Company does not take into account any performance-based vesting requirements. The performance-based vesting requirements are taken into account in determining the number of awards expected to vest and the related expense.

Restricted stock units with only service vesting conditions and restricted stock units with fixed performance vesting thresholds without graded vesting features are expensed on a straight-line basis over the total requisite service period, net of forfeitures. Restricted stock units with annually determined vesting thresholds are expensed on a graded vesting basis, net of forfeitures. As of November 1, 2014, there was $30.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested restricted stock units with performance and/or service conditions. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 15 months.

The total fair value of restricted stock units with service and/or performance vesting conditions granted during the thirty-nine weeks ended November 1, 2014 and November 2, 2013 was $22.0 million and $33.3 million, respectively. The total grant date fair value of restricted stock units with service and/or performance vesting conditions which vested during the thirty-nine weeks ended November 1, 2014 and November 2, 2013 was $17.0 million and $14.6 million, respectively.

The following table summarizes activity for restricted stock units with market vesting conditions for the thirty-nine weeks ended November 1, 2014:



	Number of Underlying Shares		Weighted-Average Grant Date Fair Value
Unvested at February 1, 2014	—		$	—
Granted ⁽¹⁾	79,458		45.02
Vested	—		—
Forfeited	(1,666	)	46.86
Unvested at November 1, 2014	77,792		$	44.98


⁽¹⁾	Reflects the target vesting amount granted. However, the number of shares that ultimately vest can vary from 0% - 200% of target depending on market performance.

The fair value of restricted stock units with market vesting conditions is calculated using a Monte Carlo simulation with the number of shares that ultimately vest dependent on the Company's total stockholder return measured against the total stockholder return of a select group of peer companies over a three-year period. The weighted-average assumptions used in the Monte Carlo simulation during the thirty-nine weeks ended November 1, 2014, were as follows:



	Chief Executive Officer			Other Executive Officers
Grant date market price	$	38.50		$	38.50
Fair value	$	43.96		$	46.86
Assumptions:
Price volatility	50		%	50		%
Expected term (years)	2.8			2.8
Risk-free interest rate	0.8		%	0.8		%
Dividend yield	2.1		%	2.1		%
Average volatility of peer companies	37.3		%	37.3		%
Average correlation coefficient of peer companies	0.3786			0.3786

Restricted stock units with market vesting conditions without graded vesting features are expensed on a straight-line basis over the requisite service period, net of forfeitures. As of November 1, 2014, there was $2.6 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested restricted stock units with market vesting conditions. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 11 months.

The total fair value of restricted stock units with market vesting conditions granted during the thirty-nine weeks ended November 1, 2014 was $3.6 million.