STOCK COMPENSATION PLANS

The Company has two stock compensation plans under which awards may be made: the Employee Incentive Plan and the Directors Equity Compensation Plan, both of which were approved by the stockholders. No award may be made under the Employee Incentive Plan after May 22, 2024 or under the Directors Equity Compensation Plan after May 15, 2018.

Under the Employee Incentive Plan, the maximum number of common shares authorized for issuance was 8.7 million. Awards may be made to employees of the Company or its related companies in the form of stock options, stock appreciation rights, shares of stock (or rights to receive shares of stock) and cash. Awards made in the form of non-qualified stock options, tax-qualified incentive stock options or stock appreciation rights have a maximum term of 10 years from the grant date and may not be granted for an exercise price below fair market value.

The Company has granted time-vesting restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs") and stock options under the Employee Incentive Plan. Stock options vest primarily in increments of 25% per year over four years. RSUs and PSUs issued to the executive officers vest primarily at the end of a three-year period. RSUs issued to other management employees vest primarily in increments of 25% per year over a four-year period. Vesting of all PSUs is contingent on the Company's performance against pre-set objectives established by the Compensation Committee of the Company's Board of Directors. The PSUs and RSUs require no payment from the employee. PSU and RSU payouts will be in shares of Company stock at vesting. Compensation expense is recognized using the fair market value at the date of grant and recorded ratably over the vesting period. However, PSU compensation expense may be adjusted over the vesting period based on interim estimates of performance against the pre-set objectives. Award holders are not entitled to receive dividends on unvested stock options, PSUs or RSUs.

Under the Directors Equity Compensation Plan, the maximum number of shares of Common Stock authorized for issuance was 1.0 million (subject to adjustment); awards may be made to non-employee directors of the Company in the form of stock options or shares of stock but may not exceed 25 thousand (subject to adjustment) shares per non-employee director in any fiscal year. Awards of shares (or rights to receive shares) reduce the above authorized amount by 1.58 shares for every share delivered pursuant to such an award. Awards made in the form of stock options may have a maximum term of 10 years from the grant date and may not be granted for an exercise price below fair market value unless the director has agreed to forego all or a portion of his or her annual cash retainer or other fees for service as a director in exchange for below-market exercise price options. Director options vest immediately. Director RSUs vest over a one-year period.

The Company uses newly-issued shares to satisfy stock option exercises and the vesting of PSUs and RSUs.

The fair value of each option award is estimated on the grant date using a Black-Scholes option valuation model and compensation expense is recognized ratably over the vesting period. The valuation model uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company's stock. The Company uses historical data to estimate the expected term of the option that represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the grant date.



	Years Ended January 31,
	2016		2015		2014
Dividend yield	1.9	%	1.3	%	1.2	%
Expected volatility	28.1	%	30.2	%	39.6	%
Risk-free interest rate	1.5	%	1.5	%	1.4	%
Expected term in years	5		5		5

A summary of the option activity for the Company's stock option plans is presented below:



	Number of Shares (in millions)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term in Years	Aggregate Intrinsic Value (in millions)
Outstanding at January 31, 2015	1.7		$	68.76	7.38	$	32.3
Granted	0.7		64.58
Exercised	(0.1	)	38.19
Forfeited/canceled	(0.2	)	76.61
Outstanding at January 31, 2016	2.1		$	67.59	7.02	$	7.9
Exercisable at January 31, 2016	1.1		$	62.78	4.74	$	7.3

The weighted-average grant-date fair value of options granted for the years ended January 31, 2016, 2015 and 2014 was $14.42, $22.25 and $29.11. The total intrinsic value (market value on date of exercise less grant price) of options exercised during the years ended January 31, 2016, 2015 and 2014 was $2.4 million, $44.1 million and $39.5 million.

A summary of the activity for the Company's RSUs is presented below:



	Number of Shares (in millions)		Weighted-Average Grant-Date Fair Value
Non-vested at January 31, 2015	0.6		$	75.46
Granted	0.3		80.44
Vested	(0.3	)	84.73
Forfeited	(0.1	)	78.44
Non-vested at January 31, 2016	0.5		$	79.02

A summary of the activity for the Company's PSUs is presented below:



	Number of Shares (in millions)		Weighted-Average Grant-Date Fair Value
Non-vested at January 31, 2015	0.7		$	70.80
Granted	0.3		58.09
Vested	(0.1	)	57.06
Forfeited/canceled	(0.2	)	61.96
Non-vested at January 31, 2016	0.7		$	70.56

The weighted-average grant-date fair value of RSUs granted for the years ended January 31, 2015 and 2014 was $90.68 and $68.66. The weighted-average grant-date fair value of PSUs granted for the years ended January 31, 2015 and 2014 was $82.88 and $83.73.

As of January 31, 2016, there was $65.6 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Employee Incentive Plan and Directors Equity Compensation Plan. The expense is expected to be recognized over a weighted-average period of 2.6 years. The total fair value of RSUs vested during the years ended January 31, 2016, 2015 and 2014 was $18.0 million, $27.7 million and $26.5 million. The total fair value of PSUs vested during the years ended January 31, 2016, 2015 and 2014 was $4.1 million, $8.1 million and $10.2 million.

Total compensation cost for stock-based compensation awards recognized in income and the related income tax benefit was $24.5 million and $7.9 million for the year ended January 31, 2016, $26.5 million and $8.9 million for the year ended January 31, 2015 and $32.2 million and $11.4 million for the year ended January 31, 2014. Total stock-based compensation cost capitalized in inventory was not significant.