10.	Share-Based Compensation

Stock Compensation Plans

The Company’s employee compensation plans are administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”). The Committee is authorized to determine, at time periods within its discretion and subject to the direction of the Board of Directors, which employees will be granted awards, the number of shares covered by any awards granted, and within applicable limits, the terms and provisions relating to the exercise and vesting of any awards.

The Company has one active compensation plan, the 2010 Omnibus Incentive Compensation Plan (the “2010 Omnibus Plan”), for employees and non-employee directors which authorizes the granting of nonvested stock awards and units, performance-based MSU Grants, stock options and other types of share-based awards. The Company also has stock options outstanding under one other compensation plan in which no future grants may be made.

The 2010 Omnibus Plan allows the Committee to grant awards for an aggregate of 1,500,000 shares of the Company’s common stock. However, this share reserve is increased by shares awarded under this and prior plans which are forfeited, expired, settled for cash and shares withheld by the Company in payment of a tax withholding obligation. Additionally, this share reserve was decreased by shares granted from prior plans after July 30, 2010 until December 1, 2010. At July 28, 2017, the number of shares authorized for future issuance under the Company’s active plan is 1,044,309.

The following table summarizes the number of outstanding awards under each plan at July 28, 2017:

2010 Omnibus Plan			131,575
2002 Omnibus Incentive Compensation Plan			4,000
Total			135,575

Types of Share-Based Awards

Nonvested Stock Awards

Nonvested stock awards consist of the Company’s common stock, generally accrue dividend equivalents and vest over 1–5 years. The fair value of the Company’s nonvested stock awards which accrue dividends is equal to the market price of the Company’s stock at the date of the grant. Dividends are forfeited for any nonvested stock awards that do not vest.

The Company’s nonvested stock awards include its long-term performance plans which were established by the Committee for the purpose of rewarding certain officers with shares of the Company’s common stock if the Company achieved certain performance targets. The stock awards under the long-term performance plans are calculated or estimated based on achievement of financial performance measures.

The following table summarizes the performance periods and vesting periods for the Company’s nonvested stock awards under its long-term performance plans at July 28, 2017:

Long-Term Performance Plan (“LTPP”)	Performance Period		Vesting Period (in Years)
2017 LTPP		2017 – 2018	2 or 3
2016 LTPP		2016 – 2017	2 or 3

The following table summarizes the shares that have been accrued under the 2017 LTPP and 2016 LTPP at July 28, 2017:

2017 LTPP			13,704
2016 LTPP			28,797

A summary of the Company’s nonvested stock activity as of July 28, 2017, and changes during 2017 are presented in the following table:

Nonvested Stock	Shares			Weighted-Average Grant Date Fair Value
Unvested at July 29, 2016		40,437		$	112.52
Granted		94,432			154.63
Vested		(102,852	)		142.93
Forfeited		--			--
Unvested at July 28, 2017		32,017		$	139.04

The following table summarizes the total fair value of nonvested stock that vested for each of the three years:

		2017				2016				2015
Total fair value of nonvested stock		$	14,700			$	8,418			$	8,152

Nonvested Stock Units

Beginning in 2017, the Company adopted long-term incentive plans that award nonvested stock units based upon relative total shareholder return. The number of nonvested stock units that will ultimately be awarded and will vest at the end of the applicable three-year performance period is based on relative total shareholder return, which is defined as increases in the Company’s stock price plus dividends paid during the performance period as compared to the total shareholder return of a group of peer companies determined by the Committee. The number of shares awarded at the end of the performance period for each nonvested stock unit may range from 75% to 125% of the target award. The probability of the actual shares expected to be earned is considered in the grant date valuation; therefore, the expense will not be adjusted to reflect the actual units earned. In addition to a service requirement, the vesting of the nonvested stock units is also subject to the achievement of a specified level of operating income during the performance period. If this performance goal is not met, no nonvested stock units will be awarded and no compensation expense will be recorded.

The fair value of the nonvested stock units is determined using the Monte-Carlo simulation model, which simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average prices for the 60 consecutive calendar days beginning 30 days prior to and ending 30 days after the first business day of the performance period. This model also incorporates the following ranges of assumptions:

·	The expected volatilities are the historical volatilities of the Company’s stock and the members of the peer group over the period commensurate with the three-year performance period.

·	The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year performance period. The risk-free rates for the nonvested stock units granted in 2017 ranged from 1.0% to 1.4%.

·	The expected dividend yield is assumed to be zero since the award holders are entitled to any dividends paid over the performance period.

Dividends accrue on the nonvested stock units. Dividends will be forfeited for nonvested stock units that do not vest.

At July 28, 2017, 3,025 nonvested stock units were accrued.

Performance-Based Market Stock Units

The number of MSU Grants that will ultimately be awarded and will vest at the end of the applicable three-year performance period for each annual plan is based on total shareholder return, which is defined as the change in the Company’s stock price plus dividends paid during the performance period. The number of shares awarded at the end of the performance period will vary in direct proportion to a target number of shares set at the beginning of the period, up to a maximum of 150% of target, based on the change in the Company’s cumulative total shareholder return over the performance period. The probability of the actual shares expected to be earned is considered in the grant date valuation; therefore, the expense will not be adjusted to reflect the actual units earned. In addition to a service requirement, the vesting of the MSU Grants is also subject to the achievement of a specified level of operating income during the performance period. If this performance goal is not met, no MSU Grants will be awarded and no compensation expense will be recorded.

The fair value of the MSU Grants is determined using the Monte-Carlo simulation model, which simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average prices for the 60 consecutive calendar days beginning 30 days prior to and ending 30 days after the first business day of the performance period. This model also incorporates the following ranges of assumptions:

·	The expected volatility is a blend of implied volatility based on market-traded options on the Company’s stock and historical volatility of our stock over the period commensurate with the three-year performance period.

·	The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year performance period.

·	The expected dividend yield is assumed to be zero since the award holders are entitled to any dividends paid over the performance period.

The following assumptions were used in determining the fair value for the Company’s MSU Grants:

	Year Ended
	July 29, 2016			July 31, 2015
Dividend yield***		--			--
Expected volatility		23% - 24	%		21	%
Risk-free interest rate range		0.9% - 1.0	%		1.0	%

***Dividends accrue on the 2015 and 2016 MSU Grants. Dividends will be forfeited for any MSU Grants that do not vest. No MSU Grants were awarded in 2017.

The following table summarizes the shares that have been accrued under the 2015 MSU Grants and 2016 MSU Grants at July 28, 2017:

	Shares
2015 MSU Grants		39,467
2016 MSU Grants		14,565

Stock Options

Prior to 2012, stock options were granted with an exercise price equal to the market price of the Company’s stock on the grant date; those option awards generally vest at a cumulative rate of 33% per year beginning on the first anniversary of the grant date and expire ten years from the date of grant. No stock options were granted in 2015, 2016 or 2017.

A summary of the Company’s stock option activity as of July 28, 2017, and changes during 2017 are presented in the following table:

Fixed Options	Shares			Weighted- Average Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at July 29, 2016		12,683		$	32.71
Granted		--			--
Exercised		(8,683	)		32.64
Forfeited		--			--
Canceled		--			--
Outstanding at July 28, 2017		4,000		$	32.86		0.33	$	490
Exercisable		4,000		$	32.86		0.33	$	490

The following table summarizes the total intrinsic values of options exercised during each of the three years:

		2017				2016				2015
Total intrinsic values of options exercised*		$	1,070			$	917			$	4,652

*The intrinsic value for stock options is defined as the difference between the current market value and the grant price.

Compensation Expense

The following table highlights the components of share-based compensation expense for each of the three years:

	2017		2016		2015
Nonvested stock awards and units	$	6,654	$	10,277	$	13,243
MSU Grants		1,804		2,925		2,967
Total compensation expense	$	8,458	$	13,202	$	16,210

The following table highlights the total unrecognized compensation expense related to nonvested stock awards, nonvested stock units and MSU Grants and the weighted-average periods over which the expense is expected to be recognized as of July 28, 2017:

	Nonvested Stock Awards		Nonvested Stock Units		MSU Grants
Total unrecognized compensation	$	2,692	$	770	$	862
Weighted-average period in years		2.12		2.01		1.02

The following table highlights the total income tax benefit recognized in the Consolidated Statements of Income for each of the three years:

		2017				2016				2015
Total income tax benefit		$	2,740			$	3,819			$	5,056

During 2017, the Company issued 99,548 shares of its common stock resulting from the vesting of share-based compensation awards and stock option exercises. Related tax withholding payments on certain share-based compensation awards exceeded proceeds received from the exercise of stock options which resulted in a net reduction to shareholders’ equity of $6,896. The excess tax benefit realized upon exercise of share-based compensation awards was $2,636.