Stock-Based Compensation

3 Months Ended

Nov. 30, 2016

4. 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 $(0.3) million and $24.8 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 during the three months ended November 30, 2016 and 2015, respectively. During the three months ended November 30, 2016, the Company recorded a $21.0 million reversal to stock-based compensation expense due to decreased expectations for the vesting of certain performance-based restricted stock awards. The Company recorded tax benefits related to the stock-based compensation expense of $0.1 million and $0.3 million, which is included in income tax expense within the Condensed Consolidated Statements of Operations for the three months ended November 30, 2016 and 2015, respectively.

The following table summarizes shares available for grant and stock appreciation rights (“SARS”) activity from August 31, 2016 through November 30, 2016:

								Weighted-
						Weighted-		Average
		Shares		Average		Average		Remaining
		Available	SARS	Intrinsic Value		Exercise		Contractual
		for Grant	Outstanding	(in thousands)		Price		Life (years)
Balance at August 31, 2016		4,898,739	2,439,066	$	1,066	$	25.32	1.13
	SARS canceled	1,331,769	(1,331,769)			$	29.27
	Restricted stock awards granted, net of
	forfeitures^(a)	1,231,137	―
	SARS exercised	―	(28,818)			$	22.52
Balance at November 30, 2016		7,461,645	1,078,479	$	1,052	$	20.55	2.08
Exercisable at November 30, 2016			1,078,479	$	1,052	$	20.55	2.08

^(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, 2016 through November 30, 2016:


					Weighted-
					Average
					Grant-Date
				Shares	Fair Value
		Unvested balance at August 31, 2016		14,777,178	$	21.09
		Changes during the period
			Shares granted^(a)	2,705,180	$	23.57
			Shares vested	(1,812,168)	$	21.25
			Shares forfeited	(3,936,317)	$	20.79
		Unvested balance at November 30, 2016		11,733,873	$	21.74

^(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, performance-based and market-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. The market-based restricted awards generally vest on a cliff vesting schedule over three years and provide a range of vesting possibilities of up to a maximum of 200%. The market-based awards have a vesting condition that is tied to the Company’s stock performance in relation to the Standard and Poor’s (S&P) Super Composite Technology Hardware and Equipment Index. The market conditions are considered in the grant date fair value using a Monte Carlo valuation model, which utilizes multiple input variables to determine the probability of the Company achieving the specified market conditions. Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. During the three months ended November 30, 2016 and 2015, the Company awarded approximately 1.0 million and 2.5 million time-based restricted stock units, respectively, 0.6 million and 1.3 million performance-based restricted stock units, respectively and 0.4 million and 0.4 million market-based stock units, respectively.

At November 30, 2016, there was $74.6 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 1.5 years.