EMPLOYEE STOCK PLANS

The Home Depot, Inc. 2005 Omnibus Stock Incentive Plan ("2005 Plan") and The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan ("1997 Plan" and collectively with the 2005 Plan, the "Plans") provide that incentive and non-qualified stock options, stock appreciation rights, restricted stock, performance shares, performance units and deferred shares may be issued to selected associates, officers and directors of the Company. Under the 2005 Plan, the maximum number of shares of the Company’s common stock authorized for issuance is 255 million shares, with any award other than a stock option reducing the number of shares available for issuance by 2.11 shares. As of January 29, 2012, there were 162 million shares available for future grants under the 2005 Plan. No additional equity awards could be issued from the 1997 Plan after the adoption of the 2005 Plan on May 26, 2005.

Under the terms of the Plans, incentive stock options and non-qualified stock options must have an exercise price at or above the fair market value of the Company’s stock on the date of the grant. Typically, incentive stock options and non-qualified stock options vest at the rate of 25% per year commencing on the first or second anniversary date of the grant and expire on the tenth anniversary date of the grant. Certain of the non-qualified stock options also include performance options which vest on the later of the first anniversary date of the grant and the date the closing price of the Company’s common stock has been 25% greater than the exercise price of the options for 30 consecutive trading days. Additionally, certain stock options may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service. The Company recognized $20 million, $20 million and $19 million of stock-based compensation expense in fiscal 2011, 2010 and 2009, respectively, related to stock options.

Restrictions on the restricted stock issued under the Plans generally lapse according to one of the following schedules: (1) the restrictions on the restricted stock lapse over various periods up to five years, (2) the restrictions on 25% of the restricted stock lapse upon the third and sixth anniversaries of the date of issuance with the remaining 50% of the restricted stock lapsing upon the associate’s attainment of age 62, or (3) the restrictions on 25% of the restricted stock lapse upon the third and sixth anniversaries of the date of issuance with the remaining 50% of the restricted stock lapsing upon the earlier of the associate’s attainment of age 60 or the tenth anniversary of the grant date. The Company has also granted performance shares

under the Plans, the payout of which is dependent on either (1) the Company’s total shareholder return percentile ranking compared to the performance of individual companies included in the S&P 500 index at the end of the three-year performance cycle, or (2) the Company’s performance against target average return on invested capital and operating profit over a three-year performance cycle. Additionally, certain awards may become non-forfeitable upon the associate's attainment of age 60, provided the associate has had five years of continuous service. The fair value of the restricted stock and performance shares is expensed over the period during which the restrictions lapse. The Company recorded stock-based compensation expense related to restricted stock and performance shares of $169 million, $167 million and $158 million in fiscal 2011, 2010 and 2009, respectively.

In fiscal 2011, 2010 and 2009, there were an aggregate of 422 thousand, 479 thousand and 666 thousand deferred shares, respectively, granted under the Plans. For associates, each deferred share entitles the individual to one share of common stock to be received up to five years after the grant date of the deferred shares, subject to certain deferral rights of the associate. Additionally, certain awards may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service. The Company recorded stock-based compensation expense related to deferred shares of $12 million, $14 million and $14 million in fiscal 2011, 2010 and 2009, respectively.

As of January 29, 2012, there were 2 million non-qualified stock options outstanding under non-qualified stock option plans that are not part of the Plans.

The Company maintains two Employee Stock Purchase Plans ("ESPPs") (U.S. and non-U.S. plans). The plan for U.S. associates is a tax-qualified plan under Section 423 of the Internal Revenue Code. The non-U.S. plan is not a Section 423 plan. As of January 29, 2012, there were 8 million shares available under the plan for U.S associates and 20 million shares available under the non-U.S. plan. The purchase price of shares under the ESPPs is equal to 85% of the stock’s fair market value on the last day of the purchase period, which is a six-month period ending on December 31 and June 30 of each year. During fiscal 2011, there were 2 million shares purchased under the ESPPs at an average price of $33.07. Under the outstanding ESPPs as of January 29, 2012, employees have contributed $8 million to purchase shares at 85% of the stock’s fair market value on the last day (June 30, 2012) of the current purchase period. The Company recognized $14 million, $13 million and $10 million of stock-based compensation expense in fiscal 2011, 2010 and 2009, respectively, related to the ESPPs.

In total, the Company recorded stock-based compensation expense, including the expense of stock options, ESPP shares, restricted stock, performance shares and deferred shares, of $215 million, $214 million and $201 million, in fiscal 2011, 2010 and 2009, respectively.

The following table summarizes stock options outstanding at January 29, 2012, January 30, 2011 and January 31, 2010, and changes during the fiscal years ended on these dates (shares in thousands):



	Number of Shares		Weighted Average Exercise Price
Outstanding at February 1, 2009	52,014		$	37.91
Granted	4,174		23.29
Exercised	(374	)	24.50
Canceled	(6,505	)	37.65
Outstanding at January 31, 2010	49,309		$	36.81
Granted	3,723		32.24
Exercised	(1,294	)	26.63
Canceled	(7,271	)	43.95
Outstanding at January 30, 2011	44,467		$	35.56
Granted	3,236		36.55
Exercised	(6,938	)	33.25
Canceled	(7,595	)	39.11
Outstanding at January 29, 2012	33,170		$	35.32

The total intrinsic value of stock options exercised was $47 million, $9 million and $1 million in fiscal 2011, 2010 and 2009, respectively. As of January 29, 2012, there were approximately 33 million stock options outstanding with a weighted average remaining life of four years and an intrinsic value of $317 million. As of January 29, 2012, there were approximately 22 million stock options exercisable with a weighted average exercise price of $40.70, a weighted average remaining life of two years, and an intrinsic value of $151 million. As of January 29, 2012, there were approximately 25 million stock options vested or expected to ultimately vest. As of January 29, 2012, there was $43 million of unamortized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted average period of two years.

The following table summarizes restricted stock and performance shares outstanding at January 29, 2012, January 30, 2011 and January 31, 2010, and changes during the fiscal years ended on these dates (shares in thousands):



	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at February 1, 2009	16,287		$	34.22
Granted	8,257		23.41
Restrictions lapsed	(1,686	)	34.65
Canceled	(2,195	)	31.84
Outstanding at January 31, 2010	20,663		$	30.11
Granted	5,799		32.31
Restrictions lapsed	(5,276	)	32.28
Canceled	(1,747	)	30.11
Outstanding at January 30, 2011	19,439		$	30.18
Granted	5,776		35.83
Restrictions lapsed	(7,937	)	31.00
Canceled	(1,537	)	30.48
Outstanding at January 29, 2012	15,741		$	31.81

As of January 29, 2012, there was $287 million of unamortized stock-based compensation expense related to restricted stock and performance shares, which is expected to be recognized over a weighted average period of two years. The total fair value of restricted stock and performance shares vesting during fiscal 2011, 2010 and 2009 was $290 million, $168 million and $41 million, respectively.