SHARE-BASED COMPENSATION

The Company issues stock appreciation rights and restricted stock units, including those with service, performance and market vesting conditions. The Company recognized share-based compensation expense of $5.3 million for the thirteen-week period ended May 3, 2014, and $13.4 million for the thirteen-week period ended May 4, 2013. The Company also recognized $2.0 million in tax benefits related to share-based compensation expense for the thirteen-week period ended May 3, 2014, and $5.0 million for the thirteen-week period ended May 4, 2013.

Stock Options

The Company did not grant any stock options during the thirteen-week period ended May 3, 2014 or the thirteen-week period ended May 4, 2013.

Below is a summary of stock option activity for the thirteen weeks ended May 3, 2014:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life
Outstanding at February 1, 2014	532,400		$	65.37
Granted	—		—
Exercised	(5,000	)	31.07
Forfeited or expired	(1,200	)	78.65
Outstanding at May 3, 2014	526,200		$	65.66	$	1,093,780	3.1
Stock options exercisable at May 3, 2014	526,200		$	65.66	$	1,093,780	3.1

The total intrinsic value of stock options which were exercised during the thirteen-week periods ended May 3, 2014 and May 4, 2013 was insignificant.

The grant date fair value of stock options which vested during the thirteen-week periods ended May 3, 2014 and May 4, 2013 was insignificant.

As of May 3, 2014, all compensation cost related to stock options had been recognized.

Stock Appreciation Rights

The following table summarizes stock appreciation rights activity for the thirteen weeks ended May 3, 2014:



	Number of Underlying Shares		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Life
Outstanding at February 1, 2014	8,982,959		$	40.76
Granted	301,500		39.10
Exercised	(15,125	)	30.83
Forfeited or expired	(8,100	)	49.02
Outstanding at May 3, 2014	9,261,234		$	40.71	$	39,254,021	3.4
Stock appreciation rights exercisable at May 3, 2014	8,480,209		$	40.30	$	39,144,076	2.9
Stock appreciation rights expected to become exercisable in the future as of May 3, 2014	688,381		$	45.71	$	84,674	8.8

The Company estimates the fair value of stock appreciation rights using the Black-Scholes option-pricing model. The weighted-average assumptions used in the Black-Scholes option-pricing model for stock appreciation rights granted during the thirteen-week periods ended May 3, 2014 and May 4, 2013, were as follows:



	Executive Officers other than the CEO						All Other Associates
	May 3, 2014			May 4, 2013			May 3, 2014			May 4, 2013
Grant date market price	$	38.50		$	45.69		$	38.63		$	45.72
Exercise price	$	39.64		$	45.69		$	38.84		$	45.72
Fair value	$	14.40		$	19.96		$	13.58		$	16.95
Assumptions:
Price volatility	50		%	61		%	50		%	54		%
Expected term (years)	4.9			4.7			4.1			4.1
Risk-free interest rate	1.8		%	0.7		%	1.4		%	0.6		%
Dividend yield	1.9		%	1.8		%	1.9		%	1.8		%

Compensation expense for stock appreciation rights is recognized on a straight-line basis over the awards’ requisite service period, net of forfeitures. As of May 3, 2014, there was $11.7 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock appreciation rights. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 17 months.

The total intrinsic value of stock appreciation rights exercised during the thirteen-week period ended May 3, 2014 was insignificant, while the total intrinsic value of stock appreciation rights exercised during the thirteen-week period ended May 4, 2013 was $1.4 million. The grant date fair value of stock appreciation rights which vested during the thirteen-week periods ended May 3, 2014 and May 4, 2013 was $7.2 million and $19.7 million, respectively.

Restricted Stock Units

The following table summarizes activity for restricted stock units with performance and/or service vesting conditions for the thirteen weeks ended May 3, 2014:



	Number of Underlying Shares		Weighted-Average Grant Date Fair Value
Unvested at February 1, 2014	1,426,579		$	46.00
Granted ⁽¹⁾	470,178		34.12
Vested	(305,188	)	48.55
Forfeited	(58,400	)	45.98
Unvested at May 3, 2014	1,533,169		$	41.21


⁽¹⁾	Number of shares granted includes 158,922 shares related to the grant of restricted stock units with performance vesting conditions in Fiscal 2014. This reflects the target amount granted; however, the number of awards that ultimately are earned will vary from 0% - 200% of target depending on the level of achievement of performance criteria.

The fair value of restricted stock units with performance and/or service vesting conditions is calculated using the market price of the underlying Common Stock on the date of grant reduced for anticipated dividend payments on unvested shares. In determining the fair value, the Company does not take into account any performance-based vesting requirements. The performance-based vesting requirements are taken into account in determining the number of awards expected to vest and the related expense.

Restricted stock units with only service vesting conditions and restricted stock units with fixed performance vesting thresholds without graded vesting features are expensed on a straight-line basis over the total requisite service period, net of forfeitures. Restricted stock units with annually determined vesting thresholds are expensed on a graded vesting basis, net of forfeitures. As of May 3, 2014, there was $38.3 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested restricted stock units with performance and/or service conditions. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 17 months.

The total fair value of restricted stock units with service and performance vesting conditions granted during the thirteen-week periods ended May 3, 2014 and May 4, 2013 was $16.0 million and $24.3 million, respectively. The total grant date fair value of restricted stock units with service and performance vesting conditions which vested during the thirteen-week periods ended May 3, 2014 and May 4, 2013 was $14.8 million and $12.5 million, respectively.

The following table summarizes activity for restricted stock units with market vesting conditions for the thirteen weeks ended May 3, 2014:



	Number of Underlying Shares	Weighted-Average Grant Date Fair Value
Unvested at February 1, 2014	—	$	—
Granted ⁽¹⁾	79,458	45.02
Vested	—	—
Forfeited	—	—
Unvested at May 3, 2014	79,458	$	45.02


⁽¹⁾	Number of shares granted reflects the target amount granted; however, the number of awards that ultimately are earned will vary from 0% - 200% of target depending on market performance.

The fair value of restricted stock units with market vesting conditions is calculated using a Monte Carlo simulation. The weighted-average assumptions used in the Monte Carlo simulation during the thirteen-week periods ended May 3, 2014 , were as follows:



	Chief Executive Officer			Executives other than CEO
Grant date market price	$	38.50		$	38.50
Fair value	$	43.96		$	46.86
Assumptions:
Price volatility	50		%	50		%
Expected term (years)	2.8			2.8
Risk-free interest rate	0.8		%	0.8		%
Dividend yield	2.1		%	2.1		%

Restricted stock units with market vesting conditions without graded vesting features are expensed on a straight-line basis over the requisite service period, net of forfeitures. As of May 3, 2014, there was $3.6 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested restricted stock units with market vesting conditions. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 14 months.

The total fair value of restricted stock units with market vesting conditions granted during the thirteen-week period ended May 3, 2014 was $3.6 million.

No restricted stock units with market vesting conditions vested during the thirteen-week period ended May 3, 2014.