STOCK COMPENSATION PLANS

3 Months Ended

Apr. 03, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK COMPENSATION PLANS

We have various stock-based compensation programs under which awards, including stock options, performance stock units (“PSUs”) and performance stock, stock appreciation rights, restricted stock units (“RSUs”) and restricted stock may be granted to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent. These programs and the accounting treatment related thereto are described in Note 10 to the Consolidated Financial Statements included in our 2015 Annual Report on Form 10-K.

For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:



	Three Months Ended
	April 3, 2016		April 5, 2015
Pre-tax compensation expense	$	11,678	$	13,889
Related income tax benefit	4,087		4,861

Compensation costs for stock compensation plans are primarily included in selling, marketing and administrative expense. As of April 3, 2016, total stock-based compensation cost related to non-vested awards not yet recognized was $99,775 and the weighted-average period over which this amount is expected to be recognized was approximately 2.3 years.

Stock Options

A summary of activity relating to grants of stock options for the period ended April 3, 2016 is as follows:



Stock Options	Shares		Weighted-Average Exercise Price (per share)	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at beginning of the period	6,842,563		$75.48	5.8 years
Granted	1,326,045		$90.38
Exercised	(583,269	)	$54.65
Forfeited	(96,163	)	$104.33
Outstanding as of April 3, 2016	7,489,176		$79.34	6.6 years	$	114,827
Options exercisable as of April 3, 2016	4,596,241		$68.79	5.1 years	$	112,614

The weighted-average fair value of options granted was $11.42 and $19.31 per share for the periods ended April 3, 2016 and April 5, 2015, respectively. The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:



	Three Months Ended
	April 3, 2016		April 5, 2015
Dividend yields	2.4	%	2.0	%
Expected volatility	16.8	%	20.8	%
Risk-free interest rates	1.5	%	1.9	%
Expected lives in years	6.8		6.7

The total intrinsic value of options exercised was $20,348 and $39,606 for the periods ended April 3, 2016 and April 5, 2015, respectively.

Performance Stock Units and Restricted Stock Units

A summary of activity relating to grants of PSUs and RSUs for the period ended April 3, 2016 is as follows:



Performance Stock Units and Restricted Stock Units	Number of units		Weighted-average grant date fair value for equity awards (per unit)
Outstanding at beginning of year	495,207		$106.40
Granted	483,678		$92.88
Performance assumption change	(16,056	)	$97.33
Vested	(179,866	)	$95.78
Forfeited	(10,056	)	$95.07
Outstanding as of April 3, 2016	772,907		$102.24

The table above excludes PSU awards for 6,893 units as of April 3, 2016 and 20,586 units as of December 31, 2015 for which the measurement date has not yet occurred for accounting purposes.

The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.



	Three Months Ended
	April 3, 2016			April 5, 2015
Units granted	483,678			266,099
Weighted-average fair value at date of grant	$	92.88		$	109.35
Monte Carlo simulation assumptions:
Estimated values	$	38.02		$	61.22
Dividend yields	2.5		%	2.0		%
Expected volatility	17.0		%	14.9		%

The intrinsic value of share-based liabilities paid, combined with the fair value of shares vested, totaled $16,181 and $37,464 for the periods ended April 3, 2016 and April 5, 2015, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 474,483 units as of April 3, 2016. Each unit is equivalent to one share of the Company’s Common Stock.