XML 41 R23.htm IDEA: XBRL DOCUMENT v3.21.2
Stock-based Compensation
 12 Months Ended
Aug. 01, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based CompensationIn 2005, shareholders approved the 2005 Long-Term Incentive Plan, which authorized the issuance of 6 million shares to satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock/units (including performance restricted stock) and performance units. In 2008, shareholders approved an amendment to the 2005 Long-Term Incentive Plan to increase the number of authorized shares to 10.5 million and in 2010, shareholders approved another amendment to the 2005 Long-Term Incentive Plan to increase the number of authorized shares to 17.5 million. In 2015, shareholders approved the 2015 Long-Term Incentive Plan, which authorized the issuance of 13 million shares. Approximately 6 million of these shares were
shares that were currently available under the 2005 plan and were incorporated into the 2015 Plan upon approval by shareholders.
Awards under Long-Term Incentive Plans may be granted to employees and directors. Pursuant to the Long-Term Incentive Plan, we adopted a long-term incentive compensation program which provides for grants of total shareholder return (TSR) performance restricted stock/units, EPS performance restricted stock/units, strategic performance restricted stock/units, time-lapse restricted stock/units, special performance restricted stock/units, free cash flow (FCF) performance restricted stock/units and unrestricted stock. Under the program, awards of TSR performance restricted stock/units will be earned by comparing our total shareholder return during a three-year period to the respective total shareholder returns of companies in a performance peer group. Based upon our ranking in the performance peer group after the relevant three-year performance period, a recipient of TSR performance restricted stock/units may earn a total award ranging from 0% to 200% of the initial grant. Awards of EPS performance restricted stock/units were earned based upon our achievement of annual earnings per share goals and vested over the relevant three-year period. During the three-year vesting period, a recipient of EPS performance restricted stock/units earned a total award of either 0% or 100% of the initial grant. Awards of the strategic performance restricted stock units were earned based upon the achievement of two key metrics, net sales and EPS growth, compared to strategic plan objectives during a three-year period. A recipient of strategic performance restricted stock units earned a total award ranging from 0% to 200% of the initial grant. Awards of FCF performance restricted stock units will be earned based upon the achievement of free cash flow (defined as Net cash provided by operating activities less capital expenditures and certain investing and financing activities) compared to annual operating plan objectives over a three-year period. An annual objective was established each fiscal year for three consecutive years. Performance against these objectives is averaged at the end of the three-year period to determine the number of underlying units that will vest at the end of the three years. A recipient of FCF performance restricted stock units may earn a total award ranging from 0% to 200% of the initial grant. Awards of time-lapse restricted stock/units will vest ratably over the three-year period. In addition, we may issue special grants of restricted stock/units to attract and retain executives which vest over various periods. Awards are generally granted annually in October.
Stock options are granted on a selective basis under the Long-Term Incentive Plans. The term of a stock option granted under these plans may not exceed ten years from the date of grant. The option price may not be less than the fair market value of a share of common stock on the date of the grant. Options granted under these plans generally vest ratably over a three-year period. In 2019, we also granted certain options that vest at the end of a three-year period. We have not issued any stock options in 2021 or 2020.
In 2021, we issued time-lapse restricted stock units, unrestricted stock and TSR performance restricted stock units. We last issued FCF performance restricted stock units in 2019, EPS performance restricted stock units in 2018, strategic performance restricted stock units in 2014 and special performance restricted units in 2015.
In determining stock-based compensation expense, we estimate forfeitures expected to occur. Total pre-tax stock-based compensation expense and tax-related benefits recognized in Earnings from continuing operations were as follows:
 202120202019
Total pre-tax stock-based compensation expense$64 $59 $50 
Tax-related benefits$12 $11 $8 
Total pre-tax stock-based compensation expense and tax-related benefits recognized in Earnings (loss) from discontinued operations were as follows:
 20202019
Total pre-tax stock-based compensation expense$2 $8 
Tax-related benefits$— $2 
The following table summarizes stock option activity as of August 1, 2021:
OptionsWeighted-
Average
Exercise
Price		Weighted-
Average
Remaining
Contractual
Life		Aggregate
Intrinsic
Value
(Options in
thousands)		 (In years) 
Outstanding at August 2, 20201,423 $45.42 
Granted— $— 
Exercised(51)$40.41 
Terminated— $— 
Outstanding at August 1, 20211,372 $45.61 5.9$4 
Exercisable at August 1, 20211,079 $48.36 5.5$2 
The total intrinsic value of options exercised during 2021 was not material. The total intrinsic value of options exercised during 2020 was $2. No options were exercised during 2019. We measure the fair value of stock options using the Black-Scholes option pricing model. The expected term of options granted was based on the weighted average time of vesting and the end of the contractual term. We utilized this simplified method as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.
The weighted-average assumptions and grant-date fair values for grants in 2019 were as follows:
 2019
Risk-free interest rate2.79%
Expected dividend yield3.84%
Expected volatility25.28%
Expected term6.1 years
Grant-date fair value$6.27
We expense stock options on a straight-line basis over the vesting period, except for awards issued to retirement eligible participants, which we expense on an accelerated basis. As of August 1, 2021, total remaining unearned compensation related to nonvested stock options was less than $1, which will be amortized over the weighted-average remaining service period of less than 1 year.
The following table summarizes time-lapse restricted stock units, EPS performance restricted stock units and FCF performance restricted stock units as of August 1, 2021:
UnitsWeighted-
Average
Grant-Date
Fair Value
 (Restricted stock
units in thousands)		 
Nonvested at August 2, 20201,866 $43.18 
Granted905 $48.37 
Vested(799)$42.83 
Forfeited(158)$46.58 
Nonvested at August 1, 20211,814 $45.63 
We determine the fair value of time-lapse restricted stock units, EPS performance restricted stock units and FCF performance restricted stock units based on the quoted price of our stock at the date of grant. We expense time-lapse restricted stock units on a straight-line basis over the vesting period, except for awards issued to retirement-eligible participants, which we expense on an accelerated basis. We expensed EPS performance restricted stock units on a graded-vesting basis, except for awards issued to retirement-eligible participants, which we expensed on an accelerated basis. As of November 1, 2020, there were no EPS performance target grants outstanding. We expense FCF performance restricted stock units over the requisite service period of each objective. In 2019, we issued approximately 388 thousand FCF performance restricted stock units. As of November 1, 2020, we have granted all of the issued FCF performance restricted stock units, which are included in the table above. There were 239 thousand FCF performance target grants outstanding at August 1, 2021, with a weighted-average grant date fair value of $44.10. The actual number of EPS performance restricted stock units and FCF performance restricted stock units that vest will depend on actual performance achieved. We estimate expense based on the number of awards expected to vest.
As of August 1, 2021, total remaining unearned compensation related to nonvested time-lapse restricted stock units and FCF performance restricted units was $30, which will be amortized over the weighted-average remaining service period of 1.6 years. The fair value of restricted stock units vested during 2021, 2020 and 2019 was $38, $41 and $26, respectively. The weighted-average grant-date fair value of the restricted stock units granted during 2020 and 2019 was $46.82 and $36.51, respectively. In the first quarter of 2022, recipients of FCF performance restricted stock units will receive a 167% payout based upon the average of actual performance achieved during a three-year period ended August 1, 2021.
The following table summarizes TSR performance restricted stock units as of August 1, 2021:
UnitsWeighted-
Average
Grant-Date
Fair Value
 (Restricted stock
units in thousands)		 
Nonvested at August 2, 20201,254 $47.83 
Granted521 $54.93 
Vested(236)$39.39 
Forfeited(317)$43.53 
Nonvested at August 1, 20211,222 $53.60 

We estimated the fair value of TSR performance restricted stock units at the grant date using a Monte Carlo simulation. Weighted-average assumptions used in the Monte Carlo simulation were as follows:
 202120202019
Risk-free interest rate0.15%1.48%2.80%
Expected dividend yield2.85%2.95%3.79%
Expected volatility29.99%27.01%24.50%
Expected term3 years3 years3 years
We recognize compensation expense on a straight-line basis over the service period, except for awards issued to retirement eligible participants, which we expense on an accelerated basis. As of August 1, 2021, total remaining unearned compensation related to TSR performance restricted stock units was $25, which will be amortized over the weighted-average remaining service period of 1.6 years. In the first quarter of 2021, recipients of TSR performance restricted stock units earned 50% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 31, 2020. In the first quarter of 2020, recipients of TSR performance restricted stock units earned 0% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 26, 2019. In the first quarter of 2019, recipients of TSR performance restricted stock units earned 0% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 27, 2018. The fair value of TSR performance restricted stock units vested during 2021 was $11. The weighted-average grant-date fair value of the TSR performance restricted stock units granted during 2020 and 2019 was $63.06 and $31.29, respectively. In the first quarter of 2022, recipients of TSR performance restricted stock units will receive a 75% payout based upon our TSR ranking in a performance peer group during a three-year period ended July 30, 2021.
The excess tax benefits of $1 in 2021 and 2020 and the excess tax deficiencies of $6 in 2019, on the exercise of stock options and vested restricted stock were presented as cash flows from operating activities. Cash received from the exercise of stock options was $2 and $23 for 2021 and 2020, respectively, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.