SHARE-BASED PAYMENTS

In accordance with stockholder-approved plans, we issue share-based payments under various stock-based compensation arrangements, including stock options, restricted stock units, cash-settled restricted stock units, performance shares, and other share-based awards. The shares to be delivered under the plan may consist, in whole or part, of treasury stock or authorized but unissued stock, not reserved for any other purpose.

On September 19, 2014, the stockholders approved the ConAgra Foods 2014 Stock Plan, which authorized the issuance of up to 30.0 million shares of ConAgra Foods common stock as well as certain shares of stock subject to outstanding awards under predecessor stock plans that expire, lapse, are cancelled, terminated, forfeited or otherwise become unexercisable. At May 31, 2015, approximately 30.2 million shares were reserved for granting additional options, restricted stock units, cash-settled restricted stock units, performance shares, or other share-based awards.

Fiscal 2015 amounts below are of continuing operations and fiscal 2014 and 2013 amounts are of continuing and discontinued operations.

Stock Option Plan

We have stockholder-approved stock option plans that provide for granting of options to employees for the purchase of common stock at prices equal to the fair value at the date of grant. Options become exercisable under various vesting schedules (typically three years) and generally expire seven to ten years after the date of grant.

The fair value of each option is estimated on the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions for stock options granted:



	2015	2014	2013
Expected volatility (%)	17.45	21.13	22.95
Dividend yield (%)	3.10	3.24	3.77
Risk-free interest rates (%)	1.58	1.37	0.57
Expected life of stock option (years)	4.92	4.91	4.80

The expected volatility is based on the historical market volatility of our stock over the expected life of the stock options granted. The expected life represents the period of time that the awards are expected to be outstanding and is based on the contractual term of each instrument, taking into account employees’ historical exercise and termination behavior.

A summary of the option activity as of May 31, 2015 and changes during the fiscal year then ended is presented below:



Options	Number of Options (in Millions)		Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at May 25, 2014	18.6		$	26.15
Granted	4.4		$	31.71
Exercised	(6.4	)	$	23.77		$	69.5
Forfeited	(1.0	)	$	31.51
Expired	(0.1	)	$	34.54
Outstanding at May 31, 2015	15.5		$	28.28	5.65	$	160.4
Exercisable at May 31, 2015	8.9		$	25.29	3.37	$	117.9

We recognize compensation expense using the straight-line method over the requisite service period. During fiscal 2015, 2014, and 2013, the Company granted 4.4 million options, 3.6 million options, and 3.9 million options, respectively, with a weighted average grant date value of $3.36, $4.71, and $2.93, respectively. The total intrinsic value of options exercised was $69.5 million, $46.9 million, and $77.2 million for fiscal 2015, 2014, and 2013, respectively. The closing market price of our common stock on the last trading day of fiscal 2015 was $38.61 per share.

Compensation expense for stock option awards totaled $12.4 million, $15.3 million, and $13.5 million for fiscal 2015, 2014, and 2013, respectively. Included in the compensation expense for stock option awards for fiscal 2015, 2014, and 2013 was $1.4 million, $2.7 million, and $0.8 million, respectively, related to stock options granted by a subsidiary in the subsidiary's shares to the subsidiary's employees. The tax benefit related to the stock option expense for fiscal 2015, 2014, and 2013 was $4.8 million, $5.7 million, and $5.0 million, respectively.

At May 31, 2015, we had $11.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to stock options that will be recognized over a weighted average period of 1.4 years.

Cash received from option exercises for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013 was $150.2 million, $104.6 million, and $259.8 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $26.7 million, $17.4 million, and $28.7 million for fiscal 2015, 2014, and 2013, respectively.

Share Unit Plans

In accordance with stockholder-approved plans, we issue stock under various stock-based compensation arrangements, including restricted stock units, cash-settled restricted stock units, and other share-based awards (“share units”). These awards generally have requisite service periods of three years. Under each arrangement, stock is issued without direct cost to the employee. We estimate the fair value of the share units based upon the market price of our stock at the date of grant. Certain share unit grants do not provide for the payment of dividend equivalents to the participant during the requisite service period (vesting period). For those grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. We recognize compensation expense for share unit awards on a straight-line basis over the requisite service period. All cash-settled restricted stock units are marked-to-market and presented within other current and noncurrent liabilities in our Consolidated Balance Sheets. The compensation expense for our stock-settled share unit awards totaled $21.0 million, $26.1 million, and $26.7 million for fiscal 2015, 2014, and 2013, respectively. The tax benefit related to the stock-settled share unit award compensation expense for fiscal 2015, 2014, and 2013 was $8.1 million, $9.8 million, and $9.9 million, respectively. The compensation expense for our cash-settled share unit awards totaled $29.2 million, $12.4 million, and $8.0 million for fiscal 2015, 2014, and 2013, respectively. The tax benefit related to the cash-settled share unit award compensation expense for fiscal 2015, 2014, and 2013 was $11.2 million, $4.6 million, and $3.0 million, respectively.

The following table summarizes the nonvested share units as of May 31, 2015 and changes during the fiscal year then ended:



	Stock-settled				Cash-settled
Share Units	Share Units (in millions)		Weighted Average Grant-Date Fair Value		Share Units (in millions)		Weighted Average Grant-Date Fair Value
Nonvested share units at May 25, 2014	3.03		$	28.71	1.58		$	30.60
Granted	0.93		$	31.71	0.89		$	30.89
Vested/Issued	(1.50	)	$	26.61	(0.05	)	$	27.35
Forfeited	(0.30	)	$	30.58	(0.25	)	$	31.02
Nonvested share units at May 31, 2015	2.16		$	31.20	2.17		$	30.74

During fiscal 2015, 2014, and 2013, we granted 0.9 million, 0.9 million, and 1.0 million stock-settled share units, respectively, with a weighted average grant date value of $31.71, $36.22, and $25.59, respectively. During fiscal 2015, 2014, and 2013, we granted 0.9 million, 0.8 million, and 0.9 million cash-settled share units, respectively, with a weighted average grant date value of $30.89, $36.89, and $24.74, respectively.

The total intrinsic value of stock-settled share units vested was $46.6 million, $46.4 million, and $24.3 million during fiscal 2015, 2014, and 2013, respectively. The total intrinsic value of cash-settled share units vested was $1.6 million during fiscal 2015.

At May 31, 2015, we had $23.2 million and $28.2 million of total unrecognized compensation expense, net of estimated forfeitures, that will be recognized over a weighted average period of 1.8 years and 1.7 years, related to stock-settled share unit awards and cash-settled share unit awards, respectively.

Performance-Based Share Plan

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 period ending in fiscal 2015 are based upon our operating cash flow return on operations, a measure of operating cash flow as a percentage of invested capital, and revenue growth, each measured over a defined performance period. The performance goals for the performance periods ending in fiscal 2016 and 2017 are based upon our earnings before interest, taxes, depreciation, and amortization ("EBITDA") return on capital, and revenue growth, each measured over the defined performance period. The awards actually earned will range from zero to two hundred twenty percent of the targeted number of performance shares for each of the performance periods. Subject to overarching minimum earnings per share performance requirements for executive officers, a payout equal to 25 percent of approved target incentive is required to be paid out for each performance period, as applicable, if we achieve a threshold level of cash flow return on operations for the performance period ending in fiscal 2015, and a threshold level of EBITDA return on capital for the performance periods ending in fiscal 2016 and 2017. 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 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.

A summary of the activity for performance share awards as of May 31, 2015 and changes during the fiscal year then ended is presented below:



Performance Shares	Shares (in Millions)		Weighted Average Grant-Date Fair Value
Nonvested performance shares at May 25, 2014	1.17		$	28.27
Granted	0.50		$	30.89
Adjustments for performance results attained and dividend equivalents	0.04		$	26.11
Vested/Issued	(0.45	)	$	26.10
Forfeited	(0.20	)	$	31.50
Nonvested performance shares at May 31, 2015	1.06		$	29.74

The compensation expense for our performance share awards totaled $5.7 million, $6.5 million, and $19.9 million for fiscal 2015, 2014, and 2013, respectively. The tax benefit related to the compensation expense for fiscal 2015, 2014, and 2013 was $2.2 million, $2.4 million, and $7.4 million, respectively.

The total intrinsic value of share units vested (including shares paid in lieu of dividends) during fiscal 2015 and 2014 was $13.9 million and $10.4 million, respectively.

Based on estimates at May 31, 2015, the Company had $2.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to performance shares that will be recognized over a weighted average period of 1.8 years.

Accounting guidance requires the benefits of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow in our Consolidated Statement of Cash Flows. As a result, in fiscal 2015, 2014, and 2013, our net operating cash flows decreased and our net financing cash flows increased by approximately $24.0 million, $18.9 million, and $21.3 million, respectively.