Share-Based Payments

9 Months Ended

Feb. 26, 2012

Share-Based Payments [Abstract]

SHARE-BASED PAYMENTS

8. SHARE-BASED PAYMENTS

For the third quarter and first three quarters of fiscal 2012, we recognized total stock-based compensation expense (including stock options, restricted stock units, and performance shares) of $10.9 million and $35.2 million, respectively. For the third quarter and first three quarters of fiscal 2011, we recognized total stock-based compensation expense of $11.8 million and $34.5 million, respectively. During the first three quarters of fiscal 2012, we granted 1.8 million restricted stock units at a weighted average grant date price of $26.10, 4.1 million stock options at a weighted average exercise price of $26.15, and 0.5 million performance shares at a weighted average grant date price of $26.11.

Performance shares are granted to selected executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. The performance goals for the performance periods ending in fiscal 2012 and fiscal 2013 are based upon our earnings before interest and taxes and our return on average invested capital measured over a defined performance period. The performance goals for the performance period ending in fiscal 2014 are based upon our operating cash flow return on operations, a measure of operating cash flow as a percentage of invested capital measured over a defined performance period, and revenue growth. The awards actually earned will range from zero to three hundred percent of the targeted number of performance shares for the performance period ending in fiscal 2012; from zero to two hundred percent of the targeted number of performance shares for the performance period ending in fiscal 2013; and from zero to two hundred twenty percent of the targeted number of performance shares for the performance period ending in fiscal 2014. For the performance period ending in fiscal 2014, a payout equal to 25% of approved target incentive is required to be paid out if we achieve a threshold level of cash flow return on operations. Awards, if earned, will be paid in shares of our common stock.

Subject to limited exceptions set forth in the performance share plan, any shares earned will be distributed at the end of the performance period. The value of the performance shares, for financial statement purposes, is adjusted based upon the market price of our common stock at the end of each reporting period and amortized as compensation expense over the vesting period.

The weighted average Black-Scholes assumptions for stock options granted during the first three quarters of fiscal 2012 were as follows:

Expected volatility (%)	22.89
Dividend yield (%)	3.97
Risk-free interest rate (%)	1.38
Expected life of stock option (years)	4.75

The weighted average value of stock options granted during the first three quarters of fiscal 2012 was $3.26 per option, based upon a Black-Scholes methodology.