STOCK-BASED COMPENSATION

12 Months Ended

May 29, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

10.   STOCK-BASED COMPENSATION

On October 29, 2016, our Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan, which was amended in July 2017 (“Stock Plan”). The Compensation and Human Capital Committee (“the Committee”) of our Board of Directors administers our stock compensation plan. The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), dividend equivalents, and other stock-based awards. At May 29, 2022, we had 10.0 million shares authorized under the Stock Plan, and 7.2 million were available for future grant.

RSUs and Performance Shares

We grant RSUs to eligible employees and non-employee directors. The employee RSUs generally vest over a three-year period while the non-employee director RSUs generally vest after one year. We estimate the fair value of the RSUs based upon the market price of our common stock on the date of grant. Compensation expense is recognized over the period the employee or non-employee director provides service in exchange for the award.

Performance Shares are granted to certain executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. Awards actually earned range from 0% to 200% of the targeted number of Performance Shares for each of the performance periods. Awards, if earned, will be paid in shares of our common stock. Subject to limited exceptions set forth in the Stock Plan, any shares earned will generally vest over a three-year period. The value of the Performance Shares is adjusted based upon the market price of our common stock and the anticipated attainment of Company-wide performance goals at the end of each reporting period and amortized as compensation expense over the vesting period.

The following table summarizes stock-based compensation activity for fiscal 2022:

	RSUs				Performance Shares
			Weighted-				Weighted-
			Average				Average
			Grant-				Grant-
			Date Fair				Date Fair
	Shares		Value		Shares		Value
Outstanding at May 30, 2021		675,302	$	66.34		335,445	$	67.02
Granted (a)		404,131		65.46		135,204		67.12
Vested (b)		(196,230)		68.64		(133,039)		69.50
Forfeited/expired/cancelled		(75,476)		67.34		(27,613)		63.94
Outstanding at May 29, 2022		807,727	$	65.25		309,997	$	66.27

(a) Granted represents new grants and dividend equivalents accrued.

(b) The aggregate fair value of awards that vested in fiscal 2022, 2021, and 2020 was $22.4 million, $29.3 million, and $24.9 million, respectively, which represents the market value of our common stock on the date that the RSUs and Performance Shares vested. The number of RSUs and Performance Shares vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures.

Compensation Expense

Our stock-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for stock-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows:

	For the Fiscal Years Ended May
(in millions)	2022		2021		2020
Stock-settled RSUs	$	15.1	$	13.9	$	12.9
Performance Shares		6.2		6.7		9.8
Stock options		—		—		0.1
Stock-settled compensation expense		21.3		20.6		22.8
Cash-settled RSUs		—		—		1.0
Total compensation expense		21.3		20.6		23.8
Income tax benefit (a)		(3.9)		(3.7)		(4.6)
Total compensation expense, net of tax benefit	$	17.4	$	16.9	$	19.2

(a) Income tax benefit represents the marginal tax rate, excluding non-deductible compensation.

Based on estimates at May 29, 2022, total unrecognized compensation expense related to stock-based awards was as follows:

			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
(in millions, except data in years)	Expense		Period (in years)
Stock-settled RSUs	$	23.9		2.0
Performance Shares		7.1		1.8
Total unrecognized compensation expense	$	31.0		2.0