Accounting for Sharebased Compensation

6 Months Ended

May. 30, 2015

Disclosure Of Share Based Compensation [Abstract]

Note 3: Accounting for Share-Based Compensation

Overview: We have various share-based compensation programs, which provide for equity awards including stock options, restricted stock shares, restricted stock units and deferred compensation. These equity awards fall under several plans and are described in detail in our Annual Report on Form 10-K for the year ended November 29, 2014.

Grant-Date Fair Value: We use the Black-Scholes option-pricing model to calculate the grant-date fair value of an award. The fair value of options granted during the 13 weeks and 26 weeks ended May 30, 2015 and May 31, 2014 were calculated using the following weighted average assumptions:

	13 Weeks Ended		26 Weeks Ended
	May 30, 2015	May 31, 2014	May 30, 2015	May 31, 2014
Expected life (in years)	4.75	4.75	4.61	4.75
Weighted-average expected volatility	30.23%	32.70%	30.91%	34.17%
Expected volatility	30.23%	32.70%	25.50% - 31.67%	32.70% - 37.06%
Risk-free interest rate	1.43%	1.64%	1.26%	1.51%
Expected dividend yield	1.22%	0.84%	1.17%	0.82%
Weighted-average fair value of grants	$10.31	$13.33	$10.21	$14.21

Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.

Expected volatility – Volatility is calculated using our historical volatility for the same period of time as the expected life. We have no reason to believe that our future volatility will differ materially from the past.

Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.

Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.

Expense Recognition: We use the straight-line attribution method to recognize share-based compensation expense for option awards, restricted stock share and restricted stock units with graded and cliff vesting. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

Total share-based compensation expense of $3,058 and $3,163 was included in our Condensed Consolidated Statements of Income for the 13 weeks ended May 30, 2015 and May 31, 2014, respectively. Total share-based compensation expense of $7,319 and $7,148 was included in our Condensed Consolidated Statements of Income for the 26 weeks ended May 30, 2015 and May 31, 2014, respectively. All share-based compensation expense was recorded as selling, general and administrative expense. For the 13 weeks ended May 30, 2015 and May 31, 2014 there was $513 and $837 of excess tax benefit recognized, respectively. For the 26 weeks ended May 30, 2015 and May 31, 2014 there was $910 and $2,450 of excess tax benefit recognized, respectively.

As of May 30, 2015, there was $10,521 of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 2.1 years. Unrecognized compensation costs related to unvested restricted stock shares was $1,994 which is expected to be recognized over a weighted-average period of 1.3 years. Unrecognized compensation costs related to unvested restricted stock units was $7,861 which is expected to be recognized over a weighted-average period of 1.7 years.

Share-based Activity

A summary of option activity as of May 30, 2015 and changes during the 26 weeks then ended is presented below:

			Weighted-
			Average
	Options		Exercise Price
Outstanding at November 29, 2014	2,534,473	$	30.39
Granted	704,180		41.17
Exercised	(173,576)		22.76
Forfeited or cancelled	(43,927)		41.66
Outstanding at May 30, 2015	3,021,150	$	33.18

The total fair values of options granted during the 13 weeks ended May 30, 2015 and May 31, 2014 were $9 and $106, respectively. Total intrinsic values of options exercised during the 13 weeks ended May 30, 2015 and May 31, 2014 were $2,223 and $3,119, respectively. Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. The total fair values of options granted during the 26 weeks ended May 30, 2015 and May 31, 2014 were $7,189 and $5,899, respectively. Total intrinsic values of options exercised during the 26 weeks ended May 30, 2015 and May 31, 2014 were $3,549 and $5,792, respectively. Proceeds received from option exercises during the 13 weeks ended May 30, 2015 and May 31, 2014 were $2,267 and $2,646, respectively and $3,951 and $4,651 during the 26 weeks ended May 30, 2015 and May 31, 2014, respectively.

A summary of nonvested restricted stock as of May 30, 2015 and changes during the 26 weeks then ended is presented below:

						Weighted-
					Weighted-	Average
					Average	Remaining
					Grant	Contractual
					Date Fair	Life
	Units	Shares	Total		Value	(in Years)
Nonvested at November 29, 2014	188,661	188,622	377,283	$	40.70	1.0
Granted	142,260	-	142,260		41.00	1.7
Vested	(80,959)	(67,294)	(148,253)		40.90	-
Forfeited	(7,353)	(8,638)	(15,991)		39.49	1.1
Nonvested at May 30, 2015	242,609	112,690	355,299	$	42.20	1.5

Total fair values of restricted stock vested during the 13 weeks ended May 30, 2015 and May 31, 2014 were $64 and $251, respectively. Total fair values of restricted stock vested during the 26 weeks ended May 30, 2015 and May 31, 2014 were $6,064 and $8,541, respectively. The total fair value of nonvested restricted stock at May 30, 2015 was $14,993.

We repurchased 86 and 2,249 restricted stock shares during the 13 weeks ended May 30, 2015 and May 31, 2014, respectively and 54,003 and 66,312 during the 26 weeks ended May 30, 2015 and May 31, 2014, respectively. The repurchases relate to statutory minimum tax withholding.

We have a Directors’ Deferred Compensation plan that allows non-employee directors to defer all or a portion of their directors’ compensation in a number of investment choices, including units representing shares of our common stock. We also have a Key Employee Deferred Compensation Plan that allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units, representing shares of our common stock. We provide a 10 percent match on deferred compensation invested into units, representing shares of our common stock. A summary of deferred compensation units as of May 30, 2015, and changes during the 26 weeks then ended is presented below:

	Non-employee
	Directors	Employees	Total
Units outstanding November 29, 2014	342,547	52,303	394,850
Participant contributions	9,438	2,310	11,748
Company match contributions	944	231	1,175
Payouts	(302)	(7,627)	(7,929)
Units outstanding May 30, 2015	352,627	47,217	399,844

Deferred compensation units are fully vested at the date of contribution.