Stock-Based Compensation Plans

8 Months Ended

May 09, 2021

Share-based Payment Arrangement [Abstract]

Note 7—Stock-Based Compensation

The 2019 Incentive Plan authorized the issuance of 17,500,000 shares (10,000,000 RSUs) of common stock for future grants, plus the remaining shares that were available for grant and the future forfeited shares from grants under the previous plan, up to a maximum of 27,800,000 shares (15,885,000 RSUs). The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes.

As required by the Company's Seventh Restated 2002 Incentive Plan and 2019 Incentive Plan, in conjunction with a special cash dividend paid in the second quarter of 2021, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value. They were adjusted by multiplying the number of outstanding shares by a factor of 1.019 (rounded up to a whole share), representing the ratio of the Nasdaq closing price of $391.77 on November 30, 2020, which was the last trading day immediately prior to the ex-dividend date, to the Nasdaq opening price of $384.50 on the ex-dividend date, December 1, 2020. The outstanding RSUs increased by approximately 94,000. The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not change. As further required by the plans, the maximum number of shares issuable was proportionally adjusted, which resulted in an additional 222,000 RSU shares available to be granted.

Summary of Restricted Stock Unit Activity

At May 9, 2021, 11,981,000 shares were available to be granted as RSUs, and the following awards were outstanding:

•4,242,000 time-based RSUs, which vest upon continued employment over specified periods;

•29,000 performance-based RSUs, granted to executive officers of the Company, for which the performance targets have been met. The awards vest upon continued employment over specified periods of time; and

•102,000 performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2021, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are included in the table below. The Company recognized compensation expense for these awards in the third quarter of 2021, as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first thirty-six weeks of 2021:


	Number of Units (in 000s)	Weighted-Average Grant Date Fair Value
Outstanding at August 30, 2020	5,174	$	207.55
Granted	1,982	369.15
Vested and delivered	(2,760)	235.67
Forfeited	(117)	251.89
Special cash dividend	94	N/A
Outstanding at May 9, 2021	4,373	$	257.87

The remaining unrecognized compensation cost related to unvested RSUs at May 9, 2021, was $852, and the weighted-average period over which this cost will be recognized is 1.7 years.

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits:


	12 Weeks Ended				36 Weeks Ended
	May 9, 2021		May 10, 2020		May 9, 2021		May 10, 2020
Stock-based compensation expense	$	87	$	88	$	550	$	508
Less recognized income tax benefit	18		18		115		105
Stock-based compensation expense, net	$	69	$	70	$	435	$	403