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Stock-Based Compensation
 12 Months Ended
Feb. 01, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]  
Stock-Based Compensation
NOTE 13: STOCK-BASED COMPENSATION
We currently grant stock-based awards under our 2019 Plan and employees may purchase our stock at a discount under our ESPP. Under our deferred and stock-based compensation plan arrangements, the Company issued 2.1, 4.9, and 1.6 shares of common stock
in 2019, 2018 and 2017.
Under the 2019 Plan, the aggregate number of shares to be issued may not exceed 9.5 plus any shares currently outstanding under the 2010 Plan that are forfeited or expire during the term of the 2019 Plan. As of February 1, 2020, we have 9.5 shares authorized, 12.2 shares issued and outstanding and 10.3 shares remaining available for future grants under the 2019 Plan. No future grants will be made under the 2002 Plan and the 2010 Plan.
Under the ESPP, employees may make payroll deductions of up to 10% of their base and bonus compensation for the purchase of Nordstrom common stock. At the end of each six-month offering period, participants apply their accumulated payroll deductions toward the purchase of shares of our common stock at 90% of the fair market value on the last day of the offer period. As of February 1, 2020, we had 12.6 shares authorized and 1.3 shares available for issuance under the ESPP. We issued 0.5 and 0.4 shares under the ESPP during 2019 and 2018. At the end of 2019 and 2018, we had current liabilities of $5 and $6 for future purchases of shares under the ESPP.
The following table summarizes our stock-based compensation expense:
Fiscal year
2019

 
2018

 
2017

RSUs

$49

 

$71

 

$51

Stock options
11

 
12

 
18

Other1 
9

 
7

 
8

Total stock-based compensation expense, before income tax benefit
69

 
90

 
77

Income tax benefit
(18
)
 
(23
)
 
(20
)
Total stock-based compensation expense, net of income tax benefit

$51

 

$67

 

$57

1 Other stock-based compensation expense includes PSUs, ESPP and nonemployee director stock awards.
The stock-based compensation expense before income tax benefit was recorded in our Consolidated Statements of Earnings as follows:
Fiscal year
2019

 
2018

 
2017

Cost of sales and related buying and occupancy costs

$20

 

$28

 

$25

SG&A expenses
49

 
62

 
52

Total stock-based compensation expense, before income tax benefit

$69

 

$90

 

$77


Restricted Stock
Our Compensation, People and Culture Committee of our Board of Directors approves grants of restricted stock units to employees. The number of units granted to an individual are determined based upon a percentage of the recipient’s base salary and the fair value of the restricted stock. Restricted stock units typically vest over four years.
A summary of restricted stock unit activity for 2019 is presented below:
Fiscal year
2019
 
Shares

 
Weighted-average grant date fair value per unit

Outstanding, beginning of year
3.9

 

$47

Granted
1.5

 
39

Vested
(1.6
)
 
46

Forfeited or cancelled
(0.6
)
 
45

Outstanding, end of year
3.2

 

$44


The aggregate fair value of restricted stock units vested during 2019, 2018 and 2017 was $65, $54 and $26. As of February 1, 2020, the total unrecognized stock-based compensation expense related to nonvested restricted stock units was $79, which is expected to be recognized over a weighted-average period of 28 months.
Stock Options
Our Compensation, People and Culture Committee of our Board of Directors approves grants of nonqualified stock options to employees. We used the following assumptions to estimate the fair value for stock options at each grant date (excluding options granted in connection with the Trunk Club acquisition):
Fiscal year1
 
2019

 
2017

Assumptions
 
 
 
 
 
Risk-free interest rate: Represents the yield on U.S. Treasury zero-coupon securities that mature over the 10-year life of the stock options.
 
2.5% – 2.7%

 
1.0% – 2.5%

 
Weighted-average volatility: Based on a combination of the historical volatility of our common stock and the implied volatility of exchange-traded options for our common stock.
 
34.6
%
 
40.1
%
 
Weighted-average expected dividend yield: Our forecasted dividend yield for the next 10 years.
 
1.9
%
 
2.4
%
 
Expected life in years: Represents the estimated period of time until option exercise. The expected term of options granted was derived from the output of the Binomial Lattice option valuation model and was based on our historical exercise behavior, taking into consideration the contractual term of the option and our employees’ expected exercise and post-vesting employment termination behavior.
 
6.8

 
7.1

 
 
 
 
 
 
Grant Date Information
 
 
 
 
 
Date of grant
 
March 5, 2019

 
February 28, 2017

 
Weighted-average fair value per option
 

$15

 

$16

 
Exercise price per option
 

$45

 

$47

1 There were no stock options granted in 2018.
A summary of stock option activity for 2019 is presented below:
Fiscal year
2019
 
Shares

 
Weighted-
average
exercise price

 
Weighted-average
remaining 
contractual
life (years)

 
Aggregate 
intrinsic 
value 

Outstanding, beginning of year
8.4

 

$53

 
 
 
 
Granted
1.0

 
45

 
 
 
 
Exercised
(0.4
)
 
30

 
 
 
 
Forfeited or cancelled
(0.7
)
 
54

 
 
 
 
Outstanding, end of year
8.3

 

$53

 
5

 

$132

Vested, end of year
6.9

 

$54

 
4

 

$118

Vested or expected to vest, end of year
8.1

 

$53

 
5

 

$130

 
 
 
 
 
 
 
 
Fiscal year
 
 
2019

 
2018

 
2017

Aggregate intrinsic value of options exercised
 
 

$5

 

$67

 

$13

Fair value of stock options vested
 
 

$17

 

$22

 

$34


As of February 1, 2020, the total unrecognized stock-based compensation expense related to nonvested stock options was $10, which is expected to be recognized over a weighted-average period of 35 months.