12. ASSOCIATE BENEFIT PLANS

Stock Compensation Plans

2015 Omnibus Incentive Plan

At the Company’s annual meeting of shareholders held on January 15, 2015, the shareholders approved the MSC Industrial Direct Co., Inc. 2015 Omnibus Incentive Plan (“2015 Omnibus Plan”). The 2015 Omnibus Plan replaced the Company’s 2005 Omnibus Incentive Plan (the “Prior Plan”) and beginning January 15, 2015, all awards are granted under the 2015 Omnibus Plan. Awards under the 2015 Omnibus Plan may be made in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, other share-based awards, and performance cash, performance shares or performance units. All outstanding awards under the Prior Plan will continue to be governed by the terms of the Prior Plan. Upon approval of the 2015 Omnibus Plan, the maximum aggregate number of shares of common stock authorized to be issued under the 2015 Omnibus Plan was 5,217 shares.

Stock Options

A summary of the status of the Company’s stock options at August 29, 2015 and changes during the fiscal year then ended is presented in the table and narrative below:


	2015

	Shares	Weighted-Average Exercise Price
Outstanding - beginning of year	1,186	$	68.24
Granted	421		83.01
Exercised	(185)		60.14
Canceled/Forfeited	(148)		78.60
Outstanding - end of year	1,274	$	73.10
Exercisable - end of year	514	$	63.75

The total intrinsic value of options exercised during the fiscal years ended August 29, 2015, August 30, 2014 and August 31, 2013 was $3,390, $13,988, and $16,402, respectively. The unrecognized share-based compensation cost related to stock option expense at August 29, 2015 was $7,281 and will be recognized over a weighted average of 1.7 years.

The fair value of each option grant for the fiscal years ended August 29, 2015, August 30, 2014 and August 31, 2013 is estimated on the date of grant using the Black‑Scholes option pricing model with the following assumptions:





		2015			2014			2013
Expected life (in years)		3.9			3.9			3.8
Risk-free interest rate		1.09	%		0.93	%		0.55	%
Expected volatility		24.5	%		26.6	%		32.9	%
Expected dividend yield		1.70	%		1.70	%		1.70	%
Weighted-Average Grant-Date Fair Value	$	14.06		$	14.98		$	15.33

The risk-free interest rate represents the United States Treasury Bond constant maturity yield approximating the expected option life of stock options granted during the period. The expected option life represents the period of time that the stock options granted during the period are expected to be outstanding, based on the mid-point between the weighted time-to-vesting and the contractual expiration date of the option. The expected volatility is based on the historical market price volatility of the Company’s common stock for the expected term of the options.

The following table summarizes information about stock options outstanding and exercisable at August 29, 2015:



Range of Exercise Prices	Number of Options Outstanding at August 29, 2015	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Intrinsic Value		Number of Options Exercisable at August 29, 2015	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Intrinsic Value
$38.07 – $44.17	64	1.0	$	43.66	$	1,514	64	1.0	$	43.66	$	1,514
44.18– 66.69	305	2.7		61.35		1,861	257	2.6		60.35		1,824
66.70 – 73.71	233	4.2		69.56		—	109	4.2		69.56		—
73.72 – 83.03	672	5.7		82.45		—	84	5.2		81.79		—
	1,274	4.5	$	73.10	$	3,375	514	3.2	$	63.75	$	3,338

Restricted Stock Awards

A summary of the non-vested restricted share awards (“RSA”) granted under the Company’s incentive plans for the fiscal year ended August 29, 2015 is as follows:


	2015

	Shares		Weighted-Average Grant-Date Fair Value
Non-vested restricted share awards at the beginning of the year	428	$	68.67
Granted	133		81.69
Vested	(134)		60.47
Canceled/Forfeited	(36)		75.66
Non-vested restricted share awards at the end of the year	391	$	75.39

The fair value of each RSA is the closing stock price on the New York Stock Exchange of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSA may be withheld to satisfy the minimum statutory withholding taxes. The remaining RSAs will be settled in shares of the Company’s Class A common stock after the vesting period.

The fair value of shares vested during the fiscal years ended August 29, 2015, August 30, 2014 and August 31, 2013 was $8,107, $14,214 and $11,373, respectively.

The unrecognized compensation cost related to the non-vested RSAs at August 29, 2015 is $16,140 and will be recognized over a weighted-average period of 2.2 years.

Restricted Stock Units

A summary of the Company’s non-vested restricted stock unit (“RSU”) award activity for the fiscal year ended August 29, 2015 is as follows:


	2015

	Shares		Weighted-Average Grant-Date Fair Value
Non-vested restricted stock unit awards at the beginning of the year	184	$	54.65
Granted	1		83.03
Vested	(123)		54.60
Canceled/Forfeited	—		—
Non-vested restricted stock unit awards at the end of the year	62	$	55.09

The fair value of each RSU is the closing stock price on the New York Stock Exchange of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSU award may be withheld to satisfy the minimum statutory withholding taxes. The remaining RSUs will be settled in shares of the Company’s Class A common stock after the vesting period. These awards accrue dividend equivalents on outstanding units (in the form of additional stock units) based on dividends declared on the Company’s Class A common stock and these additional RSUs are subject to the same vesting periods as the RSUs in the underlying award. The dividend equivalents are not included in the RSU table above.

The unrecognized compensation cost related to the RSUs at August 29, 2015 was $786 and is expected to be recognized over a period of 1.5 years.

Associate Stock Purchase Plan

The Company has established a qualified Associate Stock Purchase Plan, the terms of which allow for eligible associates (as defined in the Associate Stock Purchase Plan) to participate in the purchase of up to a maximum of 5 shares of the Company’s Class A common stock at a price equal to 90% of the closing price at the end of each stock purchase period. On January 7, 2009, the shareholders of the Company approved an increase to the authorized but unissued shares of the Class A common stock of the Company reserved for sale under the Associate Stock Purchase Plan from 800 to 1,150 shares. On January 15, 2015, the shareholders of the Company approved an increase to the authorized but unissued shares of the Class A common stock of the Company reserved for sale under the Associate Stock Purchase Plan from 1,150 to 1,500 shares. As of August 29, 2015, approximately 303 shares remain reserved for issuance under this plan. Associates purchased approximately 63 and 54 shares of common stock during fiscal 2015 and 2014 at an average per share price of $66.96 and $75.74, respectively.

Savings Plan

The Company maintains a defined contribution plan with both a profit sharing feature and a 401(k) feature which covers all associates who have completed at least one month of service with the Company. For fiscal years 2015, 2014, and 2013, the Company contributed $6,665, $6,174 and $5,243, respectively, to the plan. The Company contributions are discretionary.