N. STOCK COMPENSATION PLANS

The Company has two stock compensation plans under which awards may be made: the Employee Incentive Plan and the Directors Option Plan, both of which were approved by the stockholders. No award may be made under the Employee Incentive Plan after April 30, 2015 or under the Directors Option Plan after May 15, 2018.

Under the Employee Incentive Plan, the maximum number of common shares authorized for issuance was 13,500,000, as amended (subject to adjustment). 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 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 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 in increments of 25% per year over four years. RSUs and PSUs issued to the executive officers vest at the end of a three-year period. RSUs issued to other management employees vest 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 if interim performance objectives are not met. Award holders are not entitled to receive dividends on unvested stock options, PSUs or RSUs.

Under the Directors Option Plan, the maximum number of shares of Common Stock authorized for issuance was 1,000,000 (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 25,000 (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,
	2013			2012			2011
Dividend yield		1.6	%		1.4	%		1.2	%
Expected volatility		42.2	%		40.0	%		37.9	%
Risk-free interest rate		1.0	%		1.5	%		2.8	%
Expected term in years		6			6			7

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


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value (in thousands)
Outstanding at January 31, 2012		3,045,299		$	41.53		6.42	$	68,742
Granted		365,024			63.53
Exercised		(417,460	)		31.46
Forfeited/cancelled		(20,574	)		35.50

Outstanding at January 31, 2013		2,972,289		$	45.68		6.17	$	60,402

Exercisable at January 31, 2013		2,055,913		$	38.93		4.95	$	55,226

The weighted-average grant-date fair value of options granted for the years ended January 31, 2013, 2012 and 2011 was $21.78, $22.46 and $21.37. The total intrinsic value (market value on date of exercise less grant price) of options exercised during the years ended January 31, 2013, 2012 and 2011 was $14,359,000, $65,268,000 and $38,315,000.

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


	Number of Shares			Weighted-Average Grant-Date Fair Value
Non-vested at January 31, 2012		956,471		$	43.28
Granted		302,295			66.18
Vested		(320,214	)		37.92
Forfeited		(71,098	)		46.22

Non-vested at January 31, 2013		867,454		$	53.05

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


	Number of Shares			Weighted-Average Grant-Date Fair Value
Non-vested at January 31, 2012		1,056,615		$	43.05
Granted		234,200			59.85
Vested		(287,894	)		23.21
Forfeited/cancelled		(14,103	)		41.35

Non-vested at January 31, 2013		988,818		$	53.14

The weighted-average grant-date fair value of RSUs granted for the years ended January 31, 2012 and 2011 was $57.89 and $46.22. The weighted-average grant-date fair value of PSUs granted for the years ended January 31, 2012 and 2011 was $57.34 and $55.05.

As of January 31, 2013, there was $63,547,000 of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Employee Incentive Plan and Directors Option 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, 2013, 2012 and 2011 was $21,752,000, $21,333,000 and $20,524,000. The total fair value of PSUs vested during the years ended January 31, 2013, 2012 and 2011 was $20,340,000, $193,000 and $174,000.

Total compensation cost for stock-based compensation awards recognized in income and the related income tax benefit was $26,938,000 and $9,541,000 for the year ended January 31, 2013, $30,447,000 and $11,073,000 for the year ended January 31, 2012 and $25,436,000 and $9,181,000 for the year ended January 31, 2011. Total compensation cost capitalized in inventory was not significant.