
	Employees' Stock Incentive Plans and Management Incentive Plans

As of April 28, 2013, the Company had outstanding stock option awards, restricted stock units and restricted stock awards issued pursuant to various shareholder-approved plans and a shareholder-authorized employee stock purchase plan. The compensation cost related to these plans primarily recognized in SG&A and the related tax benefit are as follows:



	Fiscal Year Ended
	April 28, 2013		April 29, 2012		April 27, 2011
	(In millions)
Pre-tax compensation cost	$	33.7	$	36.5	$	32.7
Tax benefit	10.8		12.0		10.4
After-tax compensation cost	$	22.9	$	24.5	$	22.3

During Fiscals 2013 and 2012, the Company's plan from which it issued equity-based awards was the Fiscal Year 2003 Stock Incentive Plan (the “2003 Plan”), which was approved by shareholders on September 12, 2002. During Fiscal 2011, the Company issued equity-based awards from the 2003 Plan and the 2000 Stock Option Plan (the “2000 Plan”). The 2000 Plan was approved by Shareholders on September 12, 2000 and expired on September 12, 2010. Pursuant to the 2003 Plan, the Management Development & Compensation Committee ("MD&CC") was authorized to grant a maximum of 9.4 million shares for issuance as restricted stock units or restricted stock. Any available shares may have been issued as stock options. The maximum number of shares that may have been granted under this plan was 18.9 million shares. Shares issued under these plans were sourced from available treasury shares. The 2003 Plan was originally scheduled to continue to be used until there were no more outstanding shares to award. Effective August 28, 2012, the MD&CC approved the 2013 Plan with a term of ten years. The MD&CC was authorized to grant a maximum of 10 million shares for issuance as restricted stock units, restricted stock, or stock options.

On June 7, 2013, subsequent to the Fiscal 2013 year end and in connection with the Merger, all outstanding stock option awards, restricted stock units (except for certain retention RSUs which continue on their original terms) and restricted stock awards issued pursuant to various shareholder-approved plans and a shareholder-authorized employee stock purchase plan were automatically canceled and converted into the right to receive certain cash consideration.

In the Merger, (i) each outstanding share of Company common stock (other than shares owned by the Company, Parent, Merger Sub or any other direct or indirect wholly owned subsidiary of Parent, and in each case not held on behalf of third parties) was cancelled and automatically converted into the right to receive $72.50 in cash, without interest and less applicable withholding taxes thereon (the “Merger Consideration”), (ii) each outstanding stock option, whether vested or unvested, was cancelled and automatically converted into the right to receive, with respect to each share subject to the option, the Merger Consideration less the exercise price per share, (iii) each outstanding Company phantom unit, whether vested or unvested, was cancelled and automatically converted into the right to receive the Merger Consideration, and (iv) each outstanding Company restricted stock unit (other than retention restricted stock units, which will remain subject to the vesting schedule pursuant to the existing terms of the applicable award agreements and that the general timing of payment would be in accordance with such terms), whether vested or unvested, was cancelled and automatically converted into the right to receive, with respect to each share subject to the restricted stock unit, the Merger Consideration plus any accrued and unpaid dividend equivalents, except that payment in respect of Company restricted stock units that have been deferred will be made in accordance with the terms of the award and the applicable deferral election made by the holder.

There are currently no outstanding stock option awards, restricted stock units and restricted stock awards, other than the retention RSUs described above.

Stock Options:

Stock options generally vest over a period of four years after the date of grant. Awards granted prior to Fiscal 2006 generally had a maximum term of ten years. Awards granted between Fiscal 2006 and Fiscal 2012 have a maximum term of seven years. Beginning in Fiscal 2013, awards have a maximum term of ten years.

In accordance with their respective plans, stock option awards are forfeited if a holder voluntarily terminates employment prior to the vesting date. The Company estimates forfeitures based on an analysis of historical trends updated as discrete new information becomes available and will be re-evaluated on an annual basis. Compensation cost in any period is at least equal to the grant-date fair value of the vested portion of an award on that date.

The Company presents all benefits of tax deductions resulting from the exercise of stock-based compensation as operating cash flows in the consolidated statements of cash flows, except the benefit of tax deductions in excess of the compensation cost recognized for those options (“excess tax benefits”) which are classified as financing cash flows. For the fiscal year ended April 28, 2013, $8.1 million of cash tax benefits was reported as an operating cash inflow and $10.3 million of excess tax benefits as a financing cash inflow. For the fiscal year ended April 29, 2012, $7.5 million of cash tax benefits was reported as an operating cash inflow and $7.6 million of excess tax benefits as a financing cash inflow. For the fiscal year ended April 27, 2011, $12.4 million of cash tax benefits was reported as an operating cash inflow and $8.6 million of excess tax benefits as a financing cash inflow.

A summary of the Company’s 2003 Plan at April 28, 2013 is as follows:



	2003 Plan
	(In thousands)
Number of shares authorized	18,869
Number of stock option shares granted	(11,533	)
Number of stock option shares cancelled/forfeited and returned to the plan	1,113
Number of restricted stock units and restricted stock issued	(5,063	)
Shares available for grant as stock options	3,386

During Fiscal 2013, the Company granted 1,540,340 option awards to employees sourced from the 2003 Plan. The weighted average fair value per share of the options granted during the fiscal years ended April 28, 2013, April 29, 2012, and April 27, 2011 as computed using the Black-Scholes pricing model was $5.79, $5.80, and $5.36, respectively. The weighted average assumptions used to estimate these fair values are as follows:



	Fiscal Year Ended
	April 28, 2013		April 29, 2012		April 27, 2011
Dividend yield	3.7	%	3.7	%	3.9	%
Expected volatility	19.4	%	20.9	%	20.5	%
Expected term (years)	7.0		5.0		5.5
Risk-free interest rate	1.0	%	1.0	%	1.7	%

The dividend yield assumption is based on the current fiscal year dividend payouts. The expected volatility of the Company’s common stock at the date of grant is estimated based on a historic daily volatility rate over a period equal to the average life of an option. The weighted average expected life of options is based on consideration of historical exercise patterns adjusted for changes in the contractual term and exercise periods of current awards. The risk-free interest rate is based on the U.S. Treasury (constant maturity) rate in effect at the date of grant for periods corresponding with the expected term of the options.

A summary of the Company’s stock option activity and related information is as follows:



	Number of Options		Weighted Average Exercise Price (per share)		Aggregate Intrinsic Value
	(In thousands, except per share data)
Options outstanding at April 28, 2010	12,921		$	39.36	$	508,611
Options granted	1,733		46.42		80,460
Options exercised	(4,813	)	35.73		(171,980		)
Options cancelled/forfeited and returned to the plan	(73	)	42.81		(3,147		)
Options outstanding at April 27, 2011	9,768		42.38		413,944
Options granted	1,649		52.19		86,068
Options exercised	(2,798	)	37.99		(106,287		)
Options cancelled/forfeited and returned to the plan	(11	)	38.38		(435		)
Options outstanding at April 29, 2012	8,608		45.69		393,290
Options granted	1,540		55.72		85,828
Options exercised	(3,504	)	42.35		(148,376		)
Options cancelled/forfeited and returned to the plan	(110	)	50.67		(5,616		)
Options outstanding at April 28, 2013	6,534		$	49.76	$	325,126
Options vested and exercisable at April 27, 2011	5,744		$	40.65	$	233,507
Options vested and exercisable at April 29, 2012	4,418		$	43.90	$	193,942
Options vested and exercisable at April 28, 2013	2,573		$	48.01	$	123,502

The following summarizes information about shares under option in the respective exercise price ranges at April 28, 2013:



	Options Outstanding				Options Exercisable
		Weighted- Average Remaining	Weighted- Average Remaining			Weighted- Average Remaining	Weighted- Average
Range of Exercise	Number	Life	Exercise Price		Number	Life	Exercise Price
Price Per Share	Outstanding	(Years)	Per Share		Exercisable	(Years)	Per Share
	(Options in thousands)
$31.95-$34.00	64	0.50	$	33.86	64	0.50	$	33.86
$34.01-$42.42	716	3.15	38.98		290	2.96	38.85
$42.43-$55.72	5,754	5.45	51.28		2,219	3.40	49.61
	6,534	5.15	$	49.76	2,573	3.28	$	48.01

The Company received proceeds of $113.5 million, $82.7 million, and $154.8 million from the exercise of stock options during the fiscal years ended April 28, 2013, April 29, 2012 and April 27, 2011, respectively. The tax benefit recognized as a result of stock option exercises was $18.3 million, $15.1 million and $21.0 million for the fiscal years ended April 28, 2013, April 29, 2012, and April 27, 2011, respectively.

A summary of the status of the Company’s unvested stock options is as follows:



	Number of Options		Weighted Average Grant Date Fair Value (per share)
	(In thousands, except per share data)
Unvested options at April 29, 2012	4,190		$	5.43
Options granted	1,540		5.79
Options vested	(1,662	)	5.39
Options forfeited	(107	)	$	5.61
Unvested options at April 28, 2013	3,961		$	5.59

Unrecognized compensation cost related to unvested option awards under the 2000 and 2003 Plans totaled $4.6 million and $6.4 million as of April 28, 2013 and April 29, 2012, respectively. This cost is expected to be recognized over a weighted-average period of 1.5 years.

Restricted Stock Units and Restricted Shares:

The 2003 Plan authorizes up to 9.4 million shares for issuance as restricted stock units (“RSUs”) or restricted stock with vesting periods from the first to the fifth anniversary of the grant date as set forth in the award agreements. Upon vesting, the RSUs are converted into shares of the Company’s stock on a one-for-one basis and issued to employees, subject to any deferral elections made by a recipient or required by the plan. Restricted stock is reserved in the recipients’ name at the grant date and issued upon vesting. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holder upon vesting of the award. RSUs generally vest over a period of one to four years after the date of grant.

Total compensation expense relating to RSUs and restricted stock was $23.6 million, $25.7 million and $23.2 million for the fiscal years ended April 28, 2013, April 29, 2012, and April 27, 2011, respectively. Unrecognized compensation cost in connection with RSU and restricted stock grants totaled $24.9 million, $27.6 million, and $29.4 million at April 28, 2013, April 29, 2012, and April 27, 2011, respectively. The cost is expected to be recognized over a weighted-average period of 1.7 years.

A summary of the Company’s RSU and restricted stock awards at April 28, 2013 is as follows:



	2003 Plan
	(In thousands)
Number of shares authorized	9,440
Number of shares reserved for issuance	(6,842	)
Number of shares returned to the plan	1,779
Shares available for grant	4,377

A summary of the activity of unvested RSU and restricted stock awards and related information is as follows:



	Number of Units		Weighted Average Grant Date Fair Value (Per Share)
	(In thousands, except per share data)
Unvested units and stock at April 28, 2010	1,496		$	44.13
Units and stock granted	574		46.74
Units and stock vested	(725	)	44.96
Units and stock cancelled/forfeited and returned to the plan	(49	)	43.47
Unvested units and stock at April 27, 2011	1,296		44.84
Units and stock granted	526		52.31
Units and stock vested	(520	)	45.27
Units and stock cancelled/forfeited and returned to the plan	(32	)	45.90
Unvested units and stock at April 29, 2012	1,270		47.75
Units and stock granted	464		55.88
Units and stock vested	(567	)	47.33
Units and stock cancelled/forfeited and returned to the plan	(53	)	50.01
Unvested units and stock at April 28, 2013	1,114		$	51.24

Upon share option exercise or vesting of restricted stock and RSUs, the Company uses available treasury shares and maintains a repurchase program that anticipates exercises and vesting of awards so that shares are available for issuance. The Company records forfeitures of restricted stock as treasury share repurchases.

Global Stock Purchase Plan:

The Company had a shareholder-approved employee global stock purchase plan (the “GSPP”) that permitted substantially all employees to purchase shares of the Company’s common stock at a discounted price through payroll deductions at the end of two six-month offering periods. The offering periods were February 16 to August 15 and August 16 to February 15. The purchase price of the option was equal to 95% of the fair market value of the Company’s common stock on the last day of the offering period. The number of shares available for issuance under the GSPP was a total of five million shares. During the two offering periods from February 16, 2012 to February 15, 2013, employees purchased 121,460 shares under the plan. During the two offering periods from February 16, 2011 to February 15, 2012, employees purchased 165,635 shares under the plan.

As a result of the Merger Agreement, the Company's GSPP was terminated immediately following the scheduled purchases on the February 15, 2013 purchase date for the purchase period August 16, 2012 to February 15, 2013.

Annual Incentive Bonus:

The Company’s management incentive plans cover officers and other key employees. Participants may elect to be paid on a current or deferred basis. The aggregate amount of all awards may not exceed certain limits in any year. Compensation under the management incentive plans was approximately $32 million, $34 million, and $45 million in Fiscals 2013, 2012 and 2011, respectively.

Long-Term Performance Program:

In Fiscal 2013, the Company granted performance awards as permitted in the 2003 Plan, subject to the achievement of certain performance goals. These performance awards are tied to the Company’s relative Total Shareholder Return (“Relative TSR”) Ranking within the defined Long-term Performance Program (“LTPP”) peer group and the 2-year average after-tax Return on Invested Capital (“ROIC”) metrics. The Relative TSR metric is based on the two-year cumulative return to shareholders from the change in stock price and dividends paid between the starting and ending dates. The starting value was based on the average of each LTPP peer group company stock price for the 60 trading days prior to and including April 29, 2012. The ending value will be based on the average stock price for the 60 trading days prior to and including the close of the Fiscal 2014 year end, plus dividends paid over the 2 year performance period. The Company also granted performance awards in Fiscal 2012 under the 2012-2013 LTPP and in Fiscal 2011 under the 2011-2012 LTPP. The compensation cost related to LTPP awards primarily recognized in SG&A and the related tax benefit are as follows:



	Fiscal Year Ended
	April 28, 2013		April 29, 2012		April 27, 2011
	(In millions)
Pre-tax compensation cost	$	17.3	$	18.4	$	21.5
Tax benefit	6.1		6.5		7.4
After-tax compensation cost	$	11.2	$	11.9	$	14.1