Accounting for Sharebased Compensation

3 Months Ended

Feb. 28, 2015

Disclosure Of Share Based Compensation [Abstract]

Note 3: Accounting for Share-Based Compensation

Overview: We have various share-based compensation programs, which provide for equity awards including stock options, restricted stock shares, restricted stock units and deferred compensation. These equity awards fall under several plans and are described in detail in our Annual Report on Form 10-K for the year ended November 29, 2014.

Grant-Date Fair Value: We use the Black-Scholes option-pricing model to calculate the grant-date fair value of an award. The fair value of options granted during the 13 weeks ended February 28, 2015 and March 1, 2014 were calculated using the following weighted average assumptions:

	13 Weeks Ended
	February 28, 2015	March 1, 2014
Expected life (in years)	4.61	4.75
Weighted-average expected volatility	30.91%	34.20%
Expected volatility	25.50% - 31.67%	34.17% - 37.06%
Risk-free interest rate	1.26%	1.51%
Expected dividend yield	1.17%	0.82%
Weighted-average fair value of grants	$10.21	$14.23

Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.

Expected volatility – Volatility is calculated using our historical volatility for the same period of time as the expected life. We have no reason to believe that our future volatility will differ materially from the past.

Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.

Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.

Expense Recognition: We use the straight-line attribution method to recognize share-based compensation expense for option awards with graded vesting and restricted stock share and restricted stock units with graded and cliff vesting. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

Total share-based compensation expense of $4,261 and $3,985 was included in our Condensed Consolidated Statements of Income for the 13 weeks ended February 28, 2015 and March 1, 2014, respectively. All share-based compensation expense was recorded as selling, general and administrative expense. For the 13 weeks ended February 28, 2015 and March 1, 2014 there was $397 and $1,613 of excess tax benefit recognized, respectively.

As of February 28, 2015, there was $12,202 of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 2.4 years. Unrecognized compensation costs related to unvested restricted stock shares was $2,613 which is expected to be recognized over a weighted-average period of 1.2 years. Unrecognized compensation costs related to unvested restricted stock units was $8,942 which is expected to be recognized over a weighted-average period of 1.7 years.

Share-based Activity

A summary of option activity as of February 28, 2015 and changes during the 13 weeks then ended is presented below:

			Weighted-
			Average
	Options		Exercise Price
Outstanding at November 29, 2014	2,534,473	$	30.39
Granted	703,271		41.17
Exercised	(68,974)		24.42
Forfeited or cancelled	(23,285)		41.05
Outstanding at February 28, 2015	3,145,485	$	32.85

The total fair values of options granted during the 13 weeks ended February 28, 2015 were $7,180. Total intrinsic values of options exercised during the 13 weeks ended February 28, 2015 and March 1, 2014 were $1,326 and $2,673, respectively. Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the 13 weeks ended February 28, 2015 and March 1, 2014 were $1,684 and $2,005, respectively.

A summary of nonvested restricted stock as of February 28, 2015 and changes during the 13 weeks then ended is presented below:

						Weighted-
					Weighted-	Average
					Average	Remaining
					Grant	Contractual
					Date Fair	Life
	Units	Shares	Total		Value	(in Years)
Nonvested at November 29, 2014	188,661	188,622	377,283	$	40.70	1.0
Granted	142,028	-	142,028		41.00	1.9
Vested	(79,485)	(67,294)	(146,779)		40.88	-
Forfeited	(4,057)	(3,494)	(7,551)		41.27	1.1
Nonvested at February 28, 2015	247,147	117,834	364,981	$	42.11	1.5

Total fair values of restricted stock vested during the 13 weeks ended February 28, 2015 and March 1, 2014 were $6,000 and $8,290, respectively. The total fair value of nonvested restricted stock at February 28, 2015 was $15,369.

We repurchased 53,917 and 64,063 restricted stock shares during the 13 weeks ended February 28, 2015 and March 1, 2014, respectively. The repurchases relate to statutory minimum tax withholding.

We have a Directors’ Deferred Compensation plan that allows non-employee directors to defer all or a portion of their directors’ compensation in a number of investment choices, including units representing shares of our common stock. We also have a Key Employee Deferred Compensation Plan that allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units, representing shares of our common stock. We provide a 10 percent match on deferred compensation invested into units, representing shares of our common stock. A summary of deferred compensation units as of February 28, 2015, and changes during the 13 weeks then ended is presented below:

	Non-employee
	Directors	Employees	Total
Units outstanding November 29, 2014	342,547	52,303	394,850
Participant contributions	4,493	1,240	5,733
Company match contributions	449	124	573
Payouts	-	(6,008)	(6,008)
Units outstanding February 28, 2015	347,489	47,659	395,148

Deferred compensation units are fully vested at the date of contribution.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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