STOCK COMPENSATION PLANS

6 Months Ended

Jul. 02, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Plans

STOCK COMPENSATION PLANS

We have various stock-based compensation programs under which awards, including stock options, performance stock units (“PSUs”) and performance stock, stock appreciation rights, restricted stock units (“RSUs”) and restricted stock may be granted to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent. These programs and the accounting treatment related thereto are described in Note 10 to the Consolidated Financial Statements included in our 2016 Annual Report on Form 10-K.

For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:

	Three Months Ended				Six Months Ended
	July 2, 2017		July 3, 2016		July 2, 2017		July 3, 2016
Pre-tax compensation expense	$	12,435	$	14,530	$	24,557	$	26,208
Related income tax benefit	3,230		4,693		7,048		8,780

Compensation costs for stock compensation plans are primarily included in selling, marketing and administrative expense. As of July 2, 2017, total stock-based compensation cost related to non-vested awards not yet recognized was $84,616 and the weighted-average period over which this amount is expected to be recognized was approximately 2.3 years.

Stock Options

A summary of activity relating to grants of stock options for the period ended July 2, 2017 is as follows:

Stock Options	Shares		Weighted-Average Exercise Price (per share)		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of December 31, 2016	6,192,008		$	82.67	6.2 years
Granted	1,086,175		$	108.05
Exercised	(908,712	)	$	70.13
Forfeited	(186,032	)	$	103.43
Outstanding as of July 2, 2017	6,183,439		$	88.35	6.2 years	$	150,493
Options exercisable as of July 2, 2017	3,870,198		$	80.60	4.7 years	$	124,202

The weighted-average fair value of options granted was $15.77 and $11.42 per share for the periods ended July 2, 2017 and July 3, 2016, respectively. The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:

	Six Months Ended
	July 2, 2017		July 3, 2016
Dividend yields	2.4	%	2.4	%
Expected volatility	17.2	%	16.8	%
Risk-free interest rates	2.2	%	1.5	%
Expected term in years	6.8		6.8

The total intrinsic value of options exercised was $36,507 and $49,091 for the periods ended July 2, 2017 and July 3, 2016, respectively.

Performance Stock Units and Restricted Stock Units

A summary of activity relating to grants of PSUs and RSUs for the period ended July 2, 2017 is as follows:

Performance Stock Units and Restricted Stock Units	Number of units		Weighted-average grant date fair value for equity awards (per unit)
Outstanding as of December 31, 2016	828,228		$102.66
Granted	418,369		$111.06
Performance assumption change	19,671		$99.42
Vested	(205,327	)	$113.05
Forfeited	(109,328	)	$108.44
Outstanding as of July 2, 2017	951,613		$102.89

The table above includes 6,410 units of PSUs awarded to participants in a prior period for which the measurement (grant) date occurred for accounting purposes in 2017.

The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.

	Six Months Ended
	July 2, 2017			July 3, 2016
Units granted	418,369			514,089
Weighted-average fair value at date of grant	$	111.06		$	92.95
Monte Carlo simulation assumptions:
Estimated values	$	46.85		$	38.02
Dividend yields	2.3		%	2.5		%
Expected volatility	20.4		%	17.0		%

The fair value of shares vested totaled $22,206 and $18,079 for the periods ended July 2, 2017 and July 3, 2016, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 468,845 units as of July 2, 2017. Each unit is equivalent to one share of the Company’s Common Stock.