The Company has several active and inactive equity incentive plans under which the Company has been authorized to grant share-based awards to key employees and

non-employee

directors. Awards under these plans have been in the form of restricted stock, restricted stock units, stock options, stock appreciation rights and other awards as defined by the plans. The Company also has an Employee Stock Purchase Plan that allows employees to purchase Company shares at a discount subject to certain limitations. The Company also has an Executive Stock Purchase Plan which permits all eligible executives to purchase AutoZone’s common stock

at a

iscou

up to twenty-five percent of his or her annual salary and bonus.

On December 15, 2010, the Company’s stockholders approved the 2011 Equity Incentive Award Plan (the “2011 Plan”), allowing the Company to provide equity-based compensation to

non-employee

directors and employees for their service to AutoZone or its subsidiaries or affiliates. Prior to the Company’s adoption of the 2011 Plan, equity-based compensation was provided to employees under the 2006 Stock Option Plan and to

non-employee

directors under the 2003 Director Compensation Plan (the “2003 Comp Plan”).

During fiscal 2016, the Company’s stockholders approved the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan (the “Amended 2011 Equity Plan”). The Amended 2011 Equity Plan imposes a maximum limit on the compensation, measured as the sum of any cash compensation and the aggregate grant date fair value of awards granted under the Amended 2011 Equity Plan, which may be paid to

non-employee

directors for such service during any calendar year. The Amended 2011 Equity Plan also applies a

ten-year

term on the Amended 2011 Equity Plan through December 16, 2025 and extends the Company’s ability to grant incentive stock options through October 7, 2025.

During fiscal 2014, the Company adopted the 2014 Director Compensation Program (the “Program”), which states that

non-employee

directors will receive their compensation in awards of restricted stock units under the 2011 Equity Incentive Award Plan, with an option for a certain portion of a director’s compensation to be paid in cash at the

non-employee

director’s election. The Program replaced the 2011 Director Compensation Program. Under the Program, restricted stock units are granted January 1 of each year (the “Grant Date”). The number of restricted stock units is determined by dividing the amount of the annual retainer by the fair market value of the shares of common stock as of the Grant Date. The restricted stock units are fully vested on January 1 of each year and are paid in shares of the Company’s common stock on the fifth anniversary of the Grant Date or the date the

non-employee

director ceases to be a member of the Board (“Separation from Service”), whichever occurs first.

Non-employee

directors may elect to defer receipt of the restricted stock units until their Separation from Service. The cash portion of the award, if elected, is paid ratably over the remaining calendar quarters.

In addition to the 2011 Plan, on December 15, 2010, the Company adopted the 2011 Director Compensation Program (the “2011 Program”), which stated that

non-employee

directors would receive their compensation in awards of restricted stock units under the 2011 Plan. Under the 2011 Program, restricted stock units were granted the first day of each calendar quarter. The number of restricted stock units granted each quarter was determined by dividing

one-fourth

of the amount of the annual retainer by the fair market value of the shares of common stock as of the grant date. The restricted stock units were fully vested on the date they are issued and are paid in shares of the Company’s common stock subsequent to the

non-employee

director ceasing to be a member of the Board. The 2011 Program replaced the 2003 Comp Plan.

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $43.3 million for fiscal 2019, $43.7 million for fiscal 2018 and $38.2 million for fiscal 2017. As of August 31, 2019, share-based compensation expense for unvested awards not yet recognized in earnings is $34.3 million and will be recognized over a weighted average period of 1.7 years.

The Company grants options to purchase common stock to certain of its employees under its plan at prices equal to the market value of the stock on the date of grant. Options have a term of 10 years or 10 years and one day from grant date. Employee options generally vest in equal annual installments on the first, second, third and fourth anniversaries of the grant date and generally have 30 or 90 days after the service relationship ends, or one year after death, to exercise all vested options. The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date.

The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The following table presents the weighted average for key assumptions used in determining the fair value of options granted and the related share-based compensation expense:

Expected price volatility

– This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption as it is management’s belief that this is the best indicator of future volatility. The Company calculates daily market value changes from the date of grant over a past period representative of the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense.

Expected lives

– This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Options granted have a maximum term of ten years or ten years and one day. An increase in the expected life will increase compensation expense.

Forfeiture rate

– This is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience at the time of valuation and reduces expense ratably over the vesting period. An increase in the forfeiture rate will decrease compensation expense. This estimate is evaluated periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

The weighted average grant date fair value per share of options granted was $208.37 during fiscal 2019, $129.12 during fiscal 2018 and $139.80 during fiscal 2017. The intrinsic value of options exercised was $227.4 million in fiscal 2019, $123.1 million in fiscal 2018 and $93.9 million in fiscal 2017. The total fair value of options vested was $34.5 million in fiscal 2019, $35.7 million in fiscal 2018 and $34.7 million in fiscal 2017.

Restricted stock unit awards are valued at the market price of a share of the Company’s stock on the date of grant and vest ratably on an annual basis over a four-year service period and are payable in shares of common stock on the vesting date. Compensation expense for grants of employee restricted stock units is recognized on a straight-line basis over the four-year service period, less estimated forfeitures, which are consistent with stock option forfeiture assumptions.

As of August 31, 2019, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $5.6 million, before income taxes, which we expect to recognize over an estimated weighted average period of 3.1 years.

At August 31, 2019

the Company had $11.2 million of accrued

compensation expense

related to 10,206 outstanding units issued under the 2003 Comp Plan and prior plans. There was $13.6 million compensation expense accrued related to 17,710 outstanding units as of August 25, 2018. The decrease in outstanding units was due to the retirement of one director. As directors retire, this balance will be reduced. No additional shares of stock or units will be issued in future years under the 2003 Comp Plan.

The Company recognized $2.8 million in compensation expense related to the discount on the selling of shares to employees and executives under the various share purchase plans in fiscal 2019, $2.1 million in fiscal 2018 and $1.8 million in fiscal 2017. Under the Employee Plan, 11,011, 14,523

and

14,205 shares were sold to employees in fiscal

2019,

2018 and

2017

respectivel

. The Company repurchased 17,201 shares in fiscal 2019, 11,816 shares in fiscal 2018 and 12,455 shares in fiscal 2017

all at market value

from employees electing to sell their stock. Purchases under the Executive Plan were 1,483 shares in fiscal 2019, 1,840 shares in fiscal 2018 and 1,865 shares in fiscal 2017. Issuances of shares under the Employee Plan are netted against repurchases and such repurchases are not included in share repurchases disclosed in “Note K – Stock Repurchase Program.” At August 31, 2019, 152,766 shares of common stock were reserved for future issuance under the Employee Plan and 236,565 shares of common stock were reserved for future issuance under the Executive Plan.