Stock-Based Compensation

We currently grant share-based compensation pursuant to the Kohl’s Corporation 2010 Long-Term Compensation Plan, which provides for the granting of various forms of equity-based awards, including nonvested stock, performance share units and options to purchase shares of our common stock, to officers, key employees and directors. As of January 28, 2017, there were 18.5 million shares authorized and 7.3 million shares available for grant under the 2010 Long-Term Compensation Plan. Options and nonvested stock that are surrendered or terminated without issuance of shares are available for future grants. We also have outstanding options which were granted under previous compensation plans.

Annual grants are typically made in the first quarter of the fiscal year. Grants to newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the year.

Stock Options

The majority of stock options granted to employees vest in five equal annual installments. Outstanding options granted to employees after 2005 have a term of seven years. Outstanding options granted to employees prior to 2006 have a term of up to 15 years. Outstanding options granted to directors have a term of 10 years.

All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award was estimated using a Black-Scholes option valuation model. The weighted average fair value of options granted in 2014 was $12.23.

7. Stock-Based Compensation (continued)

The following table summarizes our stock option activity:



	2016				2015				2014
(Shares in Thousands)	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Balance at beginning of year	3,076		$	52.65	6,211		$	52.95	11,375		$	56.05
Granted	—		—		—		—		186		54.69
Exercised	(410	)	46.86		(2,815	)	52.79		(2,647	)	46.87
Forfeited/expired	(316	)	55.39		(320	)	57.36		(2,703	)	72.21
Balance at end of year	2,350		$	53.29	3,076		$	52.65	6,211		$	52.95

The intrinsic value of options exercised represents the excess of our stock price at the time the option was exercised over the exercise price and was $2 million in 2016, $52 million in 2015 and $30 million in 2014.

Additional information related to stock options outstanding and exercisable at January 28, 2017, segregated by exercise price range, is summarized below:



(Shares in Thousands)	Stock Options Outstanding				Stock Options Exercisable
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$ 41.08 – $ 50.00	831	2.4	$	47.76	623	2.3	$	47.79
$ 50.01 – $ 60.00	1,170	1.6	53.26		1,026	1.3	53.25
$ 60.01 – $ 77.62	349	0.3	66.56		349	0.3	66.56
Balance at end of year	2,350	1.7	$	53.29	1,998	1.4	$	53.88

All of our outstanding or exercisable stock options had exercise prices in excess of our stock price on January 28, 2017 ($39.00).

Nonvested Stock Awards

We have also awarded shares of nonvested common stock to eligible key employees and to our Board of Directors. Substantially all awards have restriction periods tied primarily to employment and/or service. Employee awards generally vest over five years. Director awards vest over the term to which the director was elected, generally one year. In lieu of cash dividends, holders of nonvested stock awards are granted restricted stock equivalents which vest consistently with the underlying nonvested stock awards.

The fair value of nonvested stock awards is the closing price of our common stock on the date of grant. We may acquire shares from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employee’s unvested stock award. Such shares are then designated as treasury shares.

7. Stock-Based Compensation (continued)

The following table summarizes nonvested stock activity, including restricted stock equivalents issued in lieu of cash dividends:



	2016				2015				2014
(Shares in Thousands)	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Balance at beginning of year	2,211		$	57.37	2,431		$	52.29	2,653		$	50.56
Granted	1,128		46.61		955		65.02		910		56.13
Vested	(935	)	55.54		(957	)	52.61		(818	)	50.69
Forfeited	(241	)	55.54		(218	)	55.16		(314	)	51.47
Balance at end of year	2,163		$	52.75	2,211		$	57.37	2,431		$	52.29

The aggregate fair value of awards at the time of vesting was $52 million in 2016, $50 million in 2015 and $41 million in 2014.

Performance Share Units

We grant performance-based restricted stock units ("performance share units") to certain executives. The performance measurement period for these performance share units is three fiscal years. The fair market value of the grants are determined using a Monte-Carlo valuation on the date of grant.

The actual number of shares which will be earned at the end of the three-year vesting periods will vary based on our cumulative financial performance over the vesting periods. The number of performance share units earned will be modified up or down based on Kohl’s Relative Total Shareholder Return against a defined peer group during the vesting periods. The payouts, if earned, will be settled in Kohl's common stock after the end of each multi-year performance periods.

The following table summarizes performance share unit activity by year of grant:



	2016				2015				2014
(Shares in Thousands)	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Balance at beginning of year	357		$	63.58	221		$	56.76	300		$	55.33
Granted	309		47.89		177		70.50		18		60.76
Vested	—		—		—		—		(34	)	50.72
Forfeited	(154	)	59.74		(41	)	56.71		(63	)	54.41
Balance at end of year	512		$	57.82	357		$	63.58	221		$	56.76

Other Required Disclosures

Stock-based compensation expense, other than that included in Impairments, store closing and other costs, is included in Selling, General and Administrative Expenses in our Consolidated Statements of Income. Stock-based compensation expense totaled $44 million for 2016 and $48 million for both 2015 and 2014. At January 28, 2017, we had approximately $79 million of unrecognized share-based compensation expense, which is expected to be recognized over a weighted-average period of 2 years.