NOTE 6 – 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 certain 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 1,233,897 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 for issuance as of May 31, 2016	May 31,		August 31,
	(including shares originally authorized for issuance under prior plans)	2016		2015
2013 Plan	944,905		617,850		847,876

The following table summarizes the components of the stock-based compensation expense (in thousands), which are included in general and administrative expense and warehouse club operations in the consolidated statements of income:



	Three Months Ended				Nine Months Ended
	May 31,		May 31,		May 31,		May 31,
	2016		2015		2016		2015
Options granted to directors	$	20	$	25	$	53	$	61
Restricted stock awards		1,618		929		5,295		3,633
Restricted stock units		515		328		1,383		928
Stock-based compensation expense	$	2,153	$	1,282	$	6,731	$	4,622

The following tables summarize other information related to stock-based compensation:



	Balance as of
	May 31,		May 31,
	2016		2015
Remaining unrecognized compensation cost (in thousands)	$	33,383	$	19,005
Weighted average period of time over which this cost will be recognized (years)		4		5

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 period of up to ten years, 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 period was as follows:



	Nine Months Ended
	May 31,		May 31,
	2016		2015
Grants outstanding at beginning of period		366,021		488,416
Granted		258,133		27,607
Forfeited		(747)		(9,618)
Vested		(87,090)		(142,370)
Grants outstanding at end of period		536,317		364,035

The following table summarizes the weighted average per share grant date fair value for restricted stock awards and units for the period:



	Nine Months Ended
	May 31,		May 31,
Weighted Average Grant Date Fair Value	2016		2015
Restricted stock awards and units granted	$	84.70	$	89.64
Restricted stock awards and units vested	$	63.64	$	44.42
Restricted stock awards and units forfeited	$	—	$	64.13

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:



	Nine Months Ended
	May 31,		May 31,
	2016		2015
Shares repurchased		27,360		50,639
Cost of repurchase of shares (in thousands)	$	2,017	$	4,500

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

The following table summarizes the stock options outstanding:

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.

Nine Months Ended

Excess tax benefit (deficiency) on stock-based compensation (in thousands)