10. Share-Based Compensation

Total compensation expense included in SG&A, and the associated tax benefits recognized related to the Company’s share-based compensation plans were as follows:

	Thirteen weeks ended				Twenty-six weeks ended
	August 1,		August 2,		August 1,		August 2,
	2015		2014		2015		2014

	($ in millions)
Options and shares purchased under the employee stock purchase plan	$	3	$	3	$	6	$	6
Restricted stock and restricted stock units		2		3		5		6
Total share-based compensation expense	$	5	$	6	$	11	$	12

Tax benefit recognized	$	1	$	2	$	3	$	4
Excess income tax benefit from settled equity-classified share-based awards reported as a cash flow from financing activities					$	24	$	9

Valuation Model and Assumptions

The Company uses a Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. The following table shows the Company’s assumptions used to compute the share-based compensation expense:

	Stock Option Plans						Stock Purchase Plan
	August 1,			August 2,			August 1,			August 2,
	2015			2014			2015			2014
Weighted-average risk free rate of interest		1.51	%		2.11	%		0.19	%		0.15	%
Expected volatility		30	%		39	%		24	%		24	%
Weighted-average expected award life		6.0 years			6.1 years			1.0 year			1.0 year
Dividend yield		1.6	%		2.0	%		1.7	%		2.2	%
Weighted-average fair value	$	16.01		$	14.88		$	9.53		$	6.60

The information in the following table covers options granted under the Company’s stock option plans for the twenty-six weeks ended August 1, 2015:

			Weighted-		Weighted-Average
			Average		Exercise
	Shares		Term		Price

	(in thousands, except price per share and weighted-average) term)
Options outstanding at the beginning of the year		5,569			$	25.89
Granted		682				62.11
Exercised		(1,672)				22.49
Expired or cancelled		(51)				48.20
Options outstanding at August 1, 2015		4,528		6.6	$	32.35
Options exercisable at August 1, 2015		3,305		5.7	$	24.54
Options vested and expected to vest at August 1, 2015		4,479		6.6	$	32.09
Options available for future grant at August 1, 2015		13,104

The total intrinsic value of options exercised (the difference between the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) is presented below:

	Thirteen weeks ended				Twenty-six weeks ended
	August 1,		August 2,		August 1,		August 2,
	2015		2014		2015		2014

	($ in millions)
Exercised	$	29	$	4	$	65	$	15

The aggregate intrinsic value for stock options outstanding and for stock options exercisable (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options) is presented below:

	Twenty-six weeks ended
	August 1,		August 2,
	2015		2014

	($ in millions)
Outstanding	$	173	$	130
Outstanding and exercisable	$	152	$	112
Vested and expected to vest	$	172	$	130

As of August 1, 2015, there was $11 million of total unrecognized compensation cost, related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.6 years.

The cash received from option exercises for the thirteen and twenty-six weeks ended August 1, 2015 was $15 million and $38 million, respectively. The cash received from option exercises for the thirteen and twenty-six weeks ended August 2, 2014 was $3 million and $13 million, respectively. The total tax benefit realized from option exercises was $11 million and $25 million for the thirteen and twenty-six weeks ended August 1, 2015, respectively, and was $1 million and $5 million for the corresponding prior-year periods.

The following table summarizes information about stock options outstanding and exercisable at August 1, 2015:

	Options Outstanding						Options Exercisable
			Weighted-		Weighted-
			Average		Average				Weighted-Average
Range of Exercise	Number		Remaining		Exercise		Number		Exercise
Prices	Outstanding		Contractual Life		Price		Exercisable		Price
	(in thousands, except prices per share and contractual life)
$ 9.85 to $18.80		872		4.1	$	13.28		872	$	13.28
$18.84 to $24.75		1,054		5.1	$	19.68		1,054	$	19.68
$30.92 to $36.59		1,249		7.0	$	32.79		1,075	$	32.56
$45.08 to $62.11		1,353		9.1	$	54.10		304	$	45.38
		4,528		6.6	$	32.35		3,305	$	24.54

Restricted Stock and Restricted Stock Units

Restricted shares of the Company’s common stock and restricted stock units (“RSU”) may be awarded to certain officers and key employees of the Company. RSU awards are made to executives outside of the United States and to nonemployee directors. Additionally, RSU awards are made in connection with the Company’s long-term incentive program. Each RSU represents the right to receive one share of the Company’s common stock provided that the vesting conditions are satisfied. There were 581,713 and 742,514 RSU awards outstanding as of August 1, 2015 and August 2, 2014, respectively.

Generally, awards fully vest after the passage of time, typically three years. However, RSU awards made in connection with the Company’s long-term incentive program vest after the attainment of both certain performance metrics and the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vest with the passage of time; for performance-based restricted stock, dividends will be accumulated and paid after the performance criteria are met. No dividends are paid on RSU awards.

Compensation expense is recognized using the fair market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company.

Restricted share and RSU activity for the twenty-six weeks ended August 1, 2015 is summarized as follows:

			Weighted-Average
	Number of Shares		Grant Date Fair Value per Share

	(in thousands, except price per share)
Nonvested at the beginning of the year		1,038	$	37.96
Granted		126		61.61
Vested		(312)		32.33
Expired or cancelled		(63)		38.10
Nonvested at August 1, 2015		789	$	43.95
Aggregate value ($in millions)	$	35
Weighted-average remaining contractual life (in years)		1.3 years

The weighted grant-date fair value per share was $61.61 and $45.24 for the twenty-six weeks ended August 1, 2015 and August 2, 2014, respectively. The total value of awards for which restrictions lapsed for both the twenty-six weeks ended August 1, 2015 and August 2, 2014 was $10 million and $14 million, respectively. As of August 1, 2015, there was $13 million of total unrecognized compensation cost net of forfeitures related to nonvested restricted awards.