Stock-Based Compensation

9 Months Ended

May. 31, 2015

5. Stock-Based Compensation

The Company recognizes stock-based compensation expense, reduced for estimated forfeitures, on a straight-line basis over the requisite service period of the award, which is generally the vesting period for outstanding stock awards. The Company recorded $20.1 million and $53.1 million of stock-based compensation expense gross of tax effects, which is included in selling, general and administrative expenses within the Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2015, respectively. The Company recorded tax benefits related to the stock-based compensation expense of $0.1 million and $0.6 million, which is included in income tax expense within the Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2015, respectively. The Company recorded $14.6 million and $6.6 million of stock-based compensation expense gross of tax effects, which is included in selling, general and administrative expenses within the Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2014, respectively. During the nine months ended May 31, 2014, the Company recorded a $38.4 million reversal to stock-based compensation expense due to decreased expectations for the vesting of certain restricted stock awards. The Company recorded tax benefits related to the stock-based compensation expense of $0.3 million and $0.7 million, which is included in income tax expense within the Condensed Consolidated Statements of Operations for the three months and nine months ended May 31, 2014, respectively.

The following table summarizes shares available for grant and stock option and stock appreciation right activity from August 31, 2014 through May 31, 2015:

								Weighted-
						Weighted-		Average
		Shares		Average		Average		Remaining
		Available	Options	Intrinsic Value		Exercise		Contractual
		for Grant	Outstanding	(in thousands)		Price		Life (years)
Balance at August 31, 2014		10,823,646	5,432,002	$	400	$	26.32	1.52
	Options granted	(435,000)	435,000			$	18.49
	Options canceled	1,818,653	(1,818,653)			$	24.82
	Restricted stock awards granted^(a)	(3,863,323)	―
	Options exercised	―	(267,971)			$	20.29
Balance at May 31, 2015		8,343,976	3,780,378	$	5,092	$	26.57	1.79
Exercisable at May 31, 2015			3,780,378	$	5,092	$	26.57	1.79

^(a)	Represents the maximum number of shares that can be issued based on the achievement of certain performance criteria.

	The following table summarizes restricted stock activity from August 31, 2014 through May 31, 2015:


					Weighted-
					Average
					Grant-Date
				Shares	Fair Value
		Unvested balance at August 31, 2014		9,800,942	$	19.89
		Changes during the period
			Shares granted^(a)	5,272,177	$	18.63
			Shares vested	(1,596,465)	$	19.64
			Shares forfeited	(1,408,854)	$	19.59
		Unvested balance at May 31, 2015		12,067,800	$	19.44

^(a)	For those shares granted that are based on the achievement of certain performance criteria, represents the maximum number of shares that can vest.

Certain key employees have been granted time-based and performance-based restricted stock awards. The time-based restricted awards granted generally vest on a graded vesting schedule over three years. The performance-based restricted awards generally vest on a cliff vesting schedule over three to five years and provide a range of vesting possibilities of up to a maximum of 100% or 150%, depending on the specified performance condition and the level of achievement obtained. During the nine months ended May 31, 2015 and 2014, the Company awarded approximately 2.8 million and 1.9 million time-based restricted stock units, respectively, and 1.7 million and 1.6 million performance-based restricted stock units, respectively.

At May 31, 2015, there was $75.0 million of total unrecognized stock-based compensation expense related to restricted stock awards. This expense is expected to be recognized over a weighted-average period of 1.6 years.