10. Share-Based Compensation

Total compensation expense related to the Company’s share-based compensation plans was $6 million for the thirteen weeks ended November 2, 2013, $5 million for the thirteen weeks ended October 27, 2012, and was $19 million and $15 million for the thirty-nine weeks ended November 2, 2013 and October 27, 2012, respectively. The associated tax benefits recognized for the thirteen weeks ended November 2, 2013 and October 27, 2012 was $2 million for both periods. The associated tax benefit recognized was $6 million for the thirty-nine weeks ended November 2, 2013 and $5 million for the thirty-nine weeks ended October 27, 2012.

Tax deductions in excess of the cumulative compensation cost recognized for share-based compensation arrangements were $8 million and $9 million for the thirty-nine weeks ended November 2, 2013 and October 27, 2012, respectively, and are classified as a financing activity within the Condensed Consolidated Statements of Cash Flows.

The Company uses a Black-Scholes option-pricing model to estimate the fair value of share-based awards. The Black-Scholes option-pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility.

The following table shows the Company’s assumptions used to compute the share-based compensation expense:

	Stock Option Plans Thirty-nine weeks ended							Stock Purchase Plan Thirty-nine weeks ended
	November 2,			October 27,			November 2,			October 27,
	2013			2012			2013			2012
Weighted-average risk free rate of interest		1.02	%		1.50	%		0.17	%		0.22	%
Expected volatility		42	%		43	%		40	%		38	%
Weighted-average expected award life		6.0 years			5.5 years			1.0 year			1.0 year
Dividend yield		2.3	%		2.3	%		2.3	%		2.5	%
Weighted-average fair value	$	10.98		$	10.12		$	5.80		$	5.91

The information in the following table covers options granted under the Company’s stock option plans for the thirty-nine weeks ended November 2, 2013:

(in thousands, except price per share and weighted-average term)	Shares		Weighted- Average Term	Weighted- Average Exercise Price
Options outstanding at the beginning of the year		5,907		$	19.93
Granted		1,154			34.25
Exercised		(964)			19.12
Expired or cancelled		(59)			29.56
Options outstanding at November 2, 2013		6,038	6.59	$	22.70
Options exercisable at November 2, 2013		3,857	5.40	$	18.51
Options available for future grant at November 2, 2013		3,336

	Thirteen weeks ended				Thirty-nine weeks ended
	November 2,		October 27,		November 2,		October 27,
Intrinsic value of stock options (in millions)	2013		2012		2013		2012
Exercised	$	2	$	9	$	15	$	24
Outstanding					$	74	$	85
Outstanding and exercisable					$	64	$	61

The cash received from option exercises for the thirteen and thirty-nine weeks ended November 2, 2013 was $4 million and $19 million, respectively. The cash received from option exercises for the thirteen and thirty-nine weeks ended October 27, 2012 was $15 million and $35 million, respectively. The total tax benefit realized from option exercises was $1 million and $5 million for the thirteen and thirty-nine weeks ended November 2, 2013, respectively, and was $3 million and $8 million for the corresponding prior-year periods.

The following table summarizes information about stock options outstanding and exercisable at November 2, 2013:

				Options Outstanding				Options Exercisable
Range of Exercise Prices				Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
(in thousands, except price per share and contractual life)
$	9.85	$	15.10	1,756	5.86	$	12.60	1,756	$	12.60
$	15.74	$	23.42	1,603	6.36	$	19.71	1,156	$	20.04
$	23.63	$	30.92	1,540	5.61	$	28.77	937	$	27.55
$	31.79	$	36.59	1,139	9.36	$	34.26	8	$	34.17
$	9.85	$	36.59	6,038	6.59	$	22.70	3,857	$	18.51

Changes in the Company’s nonvested options for the thirty-nine weeks ended November 2, 2013 are summarized as follows:

(in thousands, except price per share)	Number of Shares	Weighted- Average Grant Date Fair Value per Share
Nonvested at the beginning of the year	2,314	$	23.18
Granted	1,154		34.25
Vested	(1,228)		20.97
Expired or cancelled	(59)		29.56
Nonvested at November 2, 2013	2,181	$	30.11

Compensation expense related to the Company’s stock option and stock purchase plans was $3 million and $9 million for the thirteen and thirty-nine weeks ended November 2, 2013, respectively, and was $2 million and $7 million for the thirteen and thirty-nine weeks ended October 27, 2012, respectively. As of November 2, 2013, there was $11 million of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.10 years.

Restricted Stock and Units

Restricted shares of the Company’s common stock and restricted stock units may be awarded to certain officers and key employees of the Company. The Company also issues restricted stock units to its non-employee directors. Each restricted stock unit represents the right to receive one share of the Company’s common stock, provided that the vesting conditions are satisfied. As of November 2, 2013, 997,542 restricted stock units were outstanding. Compensation expense is recognized using the fair market value at the date of grant and is amortized over the vesting period, provided the recipient continues to be employed by the Company.

Generally, awards fully vest after the passage of time, typically three years. However, restricted stock unit grants made in connection with the Company’s long-term incentive program vest after the attainment of certain performance metrics and the passage of time. Restricted stock is considered outstanding at the time of grant and the holders have voting rights. Dividends are paid to holders of restricted stock that vests with the passage of time; for any performance-based restricted stock granted after May 19, 2010, dividends will be accumulated and paid after the performance criteria are met.

Restricted share and unit activity for the thirty-nine weeks ended November 2, 2013 and October 27, 2012 is summarized as follows:

	Number of Shares and Units
(in thousands)	November 2, 2013		October 27, 2012
Outstanding at beginning of period		1,564		2,068
Granted		440		264
Vested		(649)		(482)
Cancelled or forfeited		(15)		—
Outstanding at end of period		1,340		1,850
Aggregate value (in millions)	$	36	$	33
Weighted-average remaining contractual life		1.09 years		0.95 years

The weighted-average grant-date fair value per share was $34.59 and $30.75 for the thirty-nine weeks ended November 2, 2013 and October 27, 2012, respectively. The total value of awards for which restrictions lapsed during the thirty-nine weeks ended November 2, 2013 and October 27, 2012 was $9 million and $5 million, respectively. As of November 2, 2013, there was $13 million of total unrecognized compensation cost related to nonvested restricted awards. The Company recorded compensation expense related to restricted stock awards, net of forfeitures, of $3 million for both the thirteen weeks ended November 2, 2013 and October 27, 2012, and $10 million and $8 million for the thirty-nine weeks ended November 2, 2013 and October 27, 2012, respectively.