STOCK-BASED COMPENSATION

We have three types of stock-based compensation awards: restricted stock units (RSUs), stock options and company stock awarded as part of our long-term performance plan (LTPP) (formerly known as our mid-term incentive program or MTIP). Total stock-based compensation expense for 2014, 2013 and 2012 was $18.2 million, $18.7 million and $20.2 million, respectively. Total unrecognized stock-based compensation expense at November 30, 2014 was $18.9 million and the weighted-average period over which this will be recognized is 1.1 years. As of November 30, 2014, we have 5.8 million shares remaining available for future issuance under our RSUs, stock option and LTPP award programs.

For all awards, forfeiture rates are considered in the calculation of compensation expense.

Below we have summarized the key terms and the methods of valuation and expense recognition for each of our stock-based compensation awards.

RSUs

RSUs are valued at the market price of the underlying stock, discounted by foregone dividends, on the date of grant. Substantially all of the RSUs granted in 2014 vest over a three-year term or upon retirement. Prior to 2014, substantially all of the RSUs granted vested over a two-year term or upon retirement. Compensation expense is recorded in the income statement ratably over the shorter of the period until vested or the employee's retirement eligibility date.

A summary of our RSU activity for the years ended November 30 follows:



(shares in thousands)	2014				2013				2012
	Shares		Weighted- average price		Shares		Weighted- average price		Shares		Weighted- average price
Beginning of year	161		$	60.86	192		$	49.65	233		$	43.23
Granted	180		71.15		89		71.60		113		54.30
Vested	(93	)	62.57		(116	)	50.91		(147	)	42.82
Forfeited	(9	)	70.14		(4	)	59.25		(7	)	47.88
Outstanding—end of year	239		$	67.60	161		$	60.86	192		$	49.65

Stock Options

Stock options are granted with an exercise price equal to the market price of the stock on the date of grant. Substantially all of the options granted in 2014 vested ratably over a three-year period or upon retirement and are exercisable over a 10-year period. Prior to 2014, substantially all of the options granted vest ratably over a four-year period or upon retirement. Upon exercise of the option, shares are issued from our authorized and unissued shares.

The fair value of the options is estimated with a lattice option pricing model which uses the assumptions in the table below. We believe the lattice model provides an appropriate estimate of fair value of our options as it allows for a range of possible outcomes over an option term and can be adjusted for changes in certain assumptions over time. Expected volatilities are based on the historical performance of our stock. We also use historical data to estimate the timing and amount of option exercises and forfeitures within the valuation model. The expected term of the options is an output of the option pricing model and estimates the period of time that options are expected to remain unexercised. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is calculated based on the fair value of the options on the date of grant. This compensation is recorded in the income statement ratably over the shorter of the period until vested or the employee's retirement eligibility date.

The per share weighted-average fair value for all options granted was $9.48, $9.47 and $7.17 in 2014, 2013 and 2012, respectively. These fair values were computed using the following range of assumptions for our various stock compensation plans for the years ended November 30:



	2014		2013		2012
Risk-free interest rates	0.1 - 2.7%		0.1 - 1.8%		0.1 - 2.2%
Dividend yield	2.1	%	1.9	%	2.3	%
Expected volatility	15.6 - 20.1%		14.5 - 20.6%		16.5 - 21.6%
Expected lives	5.8 years		6.2 years		6.1 years

Under our stock option plans, we may issue shares on a net basis at the request of the option holder. This occurs by netting the option cost in shares from the shares exercised.

A summary of our stock option activity for the years ended November 30 follows:



(shares in millions)	2014				2013				2012
	Shares		Weighted- average exercise price		Shares		Weighted- average exercise price		Shares		Weighted- average exercise price
Beginning of year	4.6		$	47.73	5.1		$	40.06	6.6		$	34.98
Granted	1.1		71.12		0.9		71.60		0.9		54.27
Exercised	(0.8	)	37.19		(1.3	)	34.11		(2.4	)	31.43
Forfeited	(0.1	)	67.22		(0.1	)	57.33		—		—
Outstanding—end of year	4.8		54.17		4.6		47.73		5.1		40.06
Exercisable—end of year	2.8		$	45.71	2.7		$	39.62	2.7		$	34.99

As of November 30, 2014, the intrinsic value (the difference between the exercise price and the market price) for all options currently outstanding was $96.5 million and for options currently exercisable was $81.0 million. At November 30, 2014, the differences between options outstanding and options expected to vest and their related weighted average exercise prices, aggregate intrinsic values and weighted average remaining lives were not material. The total intrinsic value of all options exercised during the years ended November 30, 2014, 2013 and 2012 was $25.9 million, $43.7 million and $62.8 million, respectively. A summary of our stock options outstanding and exercisable at November 30, 2014 follows:



(shares in millions)	Options outstanding				Options exercisable
Range of exercise price	Shares	Weighted- average remaining life (yrs)	Weighted- average exercise price		Shares	Weighted- average remaining life (yrs)	Weighted- average exercise price
$20.00 - $40.00	1.4	3.9	$	35.71	1.4	3.9	$	35.71
$40.01 - $60.00	1.5	6.8	50.77		1.0	6.7	50.24
$60.01 - $80.00	1.9	8.9	71.33		0.4	8.5	71.48
	4.8	6.5	$	54.17	2.8	5.1	$	45.71

LTPP

Our LTPP delivers awards in a combination of cash and company stock. The stock compensation portion of the LTPP awards shares of company stock if certain company performance objectives are met at the end of a three-year period. These awards are valued at the market price of the underlying stock on the date of grant. Compensation expense is recorded in the income statement ratably over the three-year period of the program based on the number of shares ultimately expected to be awarded using our estimate of the most likely outcome of achieving the performance objectives.

A summary of the LTPP award activity for the years ended November 30 follows:



(shares in thousands)	2014				2013			2012
	Shares		Weighted- average price		Shares	Weighted- average price		Shares	Weighted- average price
Beginning of year	334		$	51.73	240	$	46.63	120	$	44.47
Granted	105		69.04		94	64.74		120	48.78
Vested	(118	)	44.47		—	—		—	—
Performance adjustment	(55	)	48.78		—	—		—	—
Forfeited	(35	)	65.42		—	—		—	—
Outstanding—end of year	231		$	61.94	334	$	51.73	240	$	46.63