Employee Stock Plans

9 Months Ended

Aug. 01, 2014

Employee Stock Plans

Note 10 – Employee Stock Plans

As of August 1, 2014, the Company had three share-based compensation plans, which are described below. The compensation cost that has been charged against income for those plans was $9.8 million and $7.7 million for the first nine months of fiscal 2014 and 2013, respectively. During the first nine months of fiscal 2014 and 2013, the Company issued 600,540 and 502,946 shares, respectively, under its share-based compensation plans.

Employee Stock Purchase Plan (ESPP)

The ESPP is a “safe-harbor” designed plan whereby shares are purchased by participants at a discount of 5% of the market value on the purchase date and, therefore, compensation cost is not recorded.

Employee Sharesave Scheme

The Company offers shares under its employee sharesave scheme for U.K. employees. This plan allows participants the option to purchase shares at a discount of 5% of the market price of the stock as of the beginning of the offering period. The term of these options is three years. The sharesave scheme is not a “safe-harbor” design, and therefore, compensation cost is recognized on this plan. Under the sharesave scheme, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant. The Company granted 29,242 and 16,722 options in the first nine month periods ended August 1, 2014, and July 26, 2013, respectively. The weighted-average grant date fair value of options granted during the nine month periods ended August 1, 2014, and July 26, 2013, was $27.03 and $20.24 per share, respectively.

The fair value of the awards under the employee sharesave scheme was estimated using a Black-Scholes pricing model which uses the assumptions noted in the following table. The risk-free rate for the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect at the time of grant.

	Nine Months Ended
	August 1,	July 26,
	2014	2013
Volatility	33.69%	36.97%
Risk-free interest rate	0.73%	0.40%
Expected life (years)	3	3
Dividends	0	0

Equity Incentive Plan

Under the equity incentive plan, option exercise prices are equal to the fair market value of the Company’s common stock on the date of grant. The Company granted 193,200 and 244,700 options to purchase shares in the nine month periods ended August 1, 2014, and July 26, 2013, respectively. The weighted-average grant date fair value of options granted during the nine month periods ended August 1, 2014, and July 26, 2013, was $45.23 and $29.24 per share, respectively.

The fair value of each option granted by the Company was estimated using a Black-Scholes pricing model, which uses the assumptions noted in the following table. The Company uses historical data to estimate volatility of the Company’s common stock and option exercise and employee termination assumptions. The risk-free rate for the contractual life of the option is based on the U.S. Treasury zero coupon issues in effect at the time of the grant.

	Nine Months Ended
	August 1,	July 26,
	2014	2013
Volatility	41.87 - 43.17%	41.89 - 44.25%
Risk-free interest rate	1.73 - 2.99%	0.79 - 1.88%
Expected life (years)	5 - 9	4.5 - 9.5
Dividends	0	0

The Company granted 77,575 and 32,200 restricted stock units during the nine month periods ended August 1, 2014, and July 26, 2013, respectively. The weighted-average grant date fair value of restricted stock units granted during the nine month periods ended August 1, 2014, and July 26, 2013, was $84.50 and $62.52 per share, respectively. The fair value of each restricted stock unit granted by the Company is equal to the fair market value of the Company’s common stock on the date of grant.