STOCK BASED COMPENSATION

The three types of equity awards offered by the Company are stock options (“options”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Compensation related to options is accounted for by applying the valuation technique based on the Black-Scholes model. Compensation related to RSAs and RSUs is based on the fair market value at the time of grant with the application of an estimated forfeiture rate. The Company recognizes the compensation cost related to these awards over the requisite service period as determined by the grant, amortized ratably or on a straight line basis over the life of the grant. The Company utilizes “modified grant-date accounting” for true-ups due to actual forfeitures at the vesting dates. The Company records the tax savings resulting from tax deductions in excess of expense for stock-based compensation as additional paid-in capital and the tax deficiency resulting from stock-based compensation in excess of the related tax deduction as a reduction in paid-in capital, based on the Tax Law Ordering method. In addition, the Company reflects the tax savings (deficiency) resulting from the taxation of stock-based compensation as a financing cash flow in its consolidated statement of cash flows, rather than as operating cash flows.

RSAs have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding shares of common stock. Shares of common stock subject to RSUs are not issued nor outstanding until vested, and RSUs do not have the same dividend and voting rights as common stock. However, all outstanding RSUs have accompanying dividend equivalents, requiring payment to the employees and directors with unvested RSUs of amounts equal to the dividend they would have received had the shares of common stock underlying the RSUs been actually issued and outstanding. Payments of dividend equivalents to employees are recorded as compensation expense.

The Company adopted the 2013 Equity Incentive Award Plan (the "2013 Plan") for the benefit of its eligible employees, consultants and non-employee directors on January 22, 2013. The 2013 Plan provides for awards covering up to (1) 600,000 shares of common stock plus (2) the number of shares that remained available for issuance as of January 22, 2013 under three equity participation plans previously maintained by the Company. The number of shares reserved for issuance under the 2013 Plan increases during the term of the plan by the number of shares relating to awards outstanding under the 2013 Plan or any of the prior plans that expire, or are forfeited, terminated, canceled or repurchased, or are settled in cash in lieu of shares. However, in no event will more than an aggregate of 1,531,818 shares of the Company’s common stock be issued under the 2013 Plan. The following table summarizes the shares authorized and shares available for future grants:



		Shares available to grant
	Shares authorized	August 31, 2014	August 31, 2013
2013 Plan	838,766	821,124	782,385

The following table summarizes the components of the stock-based compensation expense for the twelve-month periods ended August 31, 2014, 2013 and 2012 (in thousands), which are included in general and administrative expense and warehouse club operations in the consolidated statements of income:



	Year Ended August 31,
	2014		2013		2012
Options granted to directors	$	91	$	113	$	107
Restricted stock awards	5,326		5,268		4,834
Restricted stock units	1,034		921		528
Stock-based compensation expense	$	6,451	$	6,302	$	5,469

The following table summarizes various concepts related to stock-based compensation as of and for the years ended August 31, 2014, 2013 and 2012:



	August 31,
	2014		2013		2012
Remaining unrecognized compensation cost (in thousands)	$	21,196	$	25,450	$	25,543
Weighted average period of time over which this cost will approximately be recognized (years)	6		7		8
Excess tax benefit (deficiency) on stock-based compensation (in thousands)	$	1,489	$	1,336	$	1,438

The Company began issuing restricted stock awards in fiscal year 2006 and restricted stock units in fiscal year 2008. The restricted stock awards and units vest over a five to ten year period and the unvested portion of the award is forfeited if the employee or non-employee director leaves the Company before the vesting period is completed. Restricted stock awards and units activity for the twelve-months ended August 31, 2014, 2013 and 2012 was as follows:



	Year Ended August 31,
	2014		2013		2012
Grants outstanding at beginning of period	623,424		700,893		436,611
Granted	14,828		62,046		399,041
Forfeited	(2,669	)	(3,021	)	(5,230	)
Vested	(147,167	)	(136,494	)	(129,529	)
Grants outstanding at end of period	488,416		623,424		700,893

The following table summarizes the weighted average per share grant date fair value for restricted stock awards and units for the twelve-months of fiscal years 2014, 2013 and 2012:



	Year Ended August 31,
Weighted Average Grant Date Fair Value	2014		2013		2012
Restricted stock awards and units granted	$	105.76	$	80.79	$	67.26
Restricted stock awards and units vested	$	39.91	$	39.33	$	23.46
Restricted stock awards and units forfeited	$	54.21	$	30.88	$	29.30

The following table summarizes the total fair market value of restricted stock awards and units vested for the period (in thousands):



	Years Ended August 31,
	2014		2013		2012
Total fair market value of restricted stock awards and units vested	$	13,797	$	10,673	$	8,812

At the vesting dates of restricted stock awards, the Company repurchases shares at the prior day's closing price per share, with the funds used to pay the employees' minimum statutory tax withholding requirements. The Company expects to continue this practice going forward. The following table summarizes this activity during the period:



	Years Ended August 31,
	2014		2013		2012
Shares repurchased	50,898		44,460		46,373
Cost of repurchase of shares (in thousands)	$	4,773	$	3,467	$	3,154

The Company reissues treasury shares as part of its stock-based compensation programs. The following table summarizes the treasury shares reissued during the period:



	Years Ended August 31,
	2014	2013	2012
Reissued treasury shares	—	—	196,850

The following table summarizes the stock options outstanding:



	August 31, 2014	August 31, 2013
Stock options outstanding	23,000	28,000

Due to the substantial shift from the use of stock options to restricted stock awards and units, the Company believes stock option activity is no longer significant and that any further disclosure on options is not necessary.