Stock-Based Compensation

Stock-based compensation. For the three and nine month periods ended October 28, 2017 and October 29, 2016, the Company recognized stock-based compensation expense as follows:



	Three Months Ended				Nine Months Ended
($000)	October 28, 2017		October 29, 2016		October 28, 2017		October 29, 2016
Restricted stock	$	11,207	$	10,108	$	32,927	$	28,657
Performance awards	10,215		9,423		29,668		25,661
Employee stock purchase plan	796		753		2,342		2,171
Total	$	22,218	$	20,284	$	64,937	$	56,489

Total stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Earnings for the three and nine month periods ended October 28, 2017 and October 29, 2016, is as follows:



	Three Months Ended				Nine Months Ended
Statements of Earnings Classification ($000)	October 28, 2017		October 29, 2016		October 28, 2017		October 29, 2016
Cost of goods sold	$	10,377	$	9,569	$	30,488	$	25,677
Selling, general and administrative	11,841		10,715		34,449		30,812
Total	$	22,218	$	20,284	$	64,937	$	56,489

The tax benefits related to stock-based compensation expense for the three and nine month periods ended October 28, 2017, were $7.9 million and $22.7 million, respectively. The tax benefits related to stock-based compensation expense for the three and nine month periods ended October 29, 2016, were $7.2 million and $19.7 million, respectively.

Restricted stock awards. The Company grants shares of restricted stock to directors, officers, and key employees. The market value of shares of restricted stock at the date of grant is amortized to expense over the vesting period of generally three to five years.

During the three and nine month periods ended October 28, 2017 and October 29, 2016, shares purchased by the Company for tax withholding totaled 37,214 and 683,961, and 55,831 and 737,891, respectively, and are considered treasury shares which are available for reissuance.

Performance share awards. The Company has a performance share award program for senior executives. A performance share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s attainment of a profitability-based performance goal during the performance period, which is the Company’s fiscal year. If attained, the restricted stock then vests over a service period, generally two to three years from the date the performance award was granted.

As of October 28, 2017, shares related to unvested restricted stock and performance share awards totaled 5.2 million shares. A summary of restricted stock and performance share award activity for the nine month period ended October 28, 2017, is presented below:



(000, except per share data)	Number of shares		Weighted average grant date fair value
Unvested at January 28, 2017	5,563		$	43.19
Awarded	1,266		64.83
Released	(1,583	)	37.97
Forfeited	(37	)	49.03
Unvested at October 28, 2017	5,209		$	50.77

The unamortized compensation expense at October 28, 2017, was $123.0 million which is expected to be recognized over a weighted-average remaining period of 2.0 years. The unamortized compensation expense at October 29, 2016, was $112.8 million, which was expected to be recognized over a weighted-average remaining period of 2.1 years.

Employee stock purchase plan. Under the Employee Stock Purchase Plan (“ESPP”), eligible employees participating in the quarterly offering period can choose to have up to the lesser of 10% of their annual base earnings or the IRS annual share purchase limit of $25,000 in aggregate market value to purchase the Company’s common stock. The purchase price of the stock is 85% of the closing market price on the date of purchase. Purchases occur on a quarterly basis (on the last trading day of each calendar quarter). The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.

2017 Equity Incentive Plan. At the Company’s Annual Meeting on May 17, 2017, stockholders approved the Ross Stores, Inc. 2017 Equity Incentive Plan ("2017 Plan") which replaced the Company’s 2008 Equity Incentive Plan ("Predecessor Plan"). The 2017 Plan, which was authorized to issue a maximum of 12.0 million shares, was immediately effective upon approval and no further awards were granted under the Predecessor Plan, which was terminated.