Share-Based Compensation

3 Months Ended

Apr. 30, 2011

Share-Based Compensation

Share-Based Compensation

4. Share-Based Compensation

We currently grant share-based compensation, including options to purchase shares of our common stock and nonvested stock, pursuant to the Kohl's Corporation 2010 Long-Term Compensation Plan. Annual grants of stock options and nonvested stock are generally made to eligible employees in the first quarter of the fiscal year. Grants to newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the year.

The Black-Scholes option valuation model was used to estimate the fair value of each option award during the first quarter of the respective fiscal year based on the following assumptions:

	2011		2010
Volatility		33.1%		33.6%
Risk-free interest rate		2.2%		2.5%
Expected life in years		5.4		5.4
Dividend yield		1.8%		0%
Weighted-average fair value at grant date	$	14.81	$	19.51

The following table summarizes our stock option activity for the first three months of 2011 and 2010:

	2011					2010
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
	(Shares in Thousands)
Balance at beginning of year		17,869		$	53.17		19,848		$	52.10
Granted		749			52.78		458			55.66
Exercised		(286	)		45.05		(872	)		36.27
Forfeited/expired		(482	)		63.77		(139	)		54.06
Balance at end of quarter		17,850		$	53.00		19,295		$	52.89

The following table summarizes our nonvested stock activity for the first three months of 2011 and 2010:

	2011					2010
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
	(Shares in Thousands)
Balance at beginning of year		1,116		$	49.30		883		$	45.44
Granted (1)		978			52.11		430			55.74
Vested		(246	)		49.23		(177	)		47.41
Forfeited		(6	)		54.28		(2	)		42.89
Balance at end of quarter		1,842		$	50.79		1,134		$	49.03

(1) Includes 469 thousand shares granted in March 2011 which include both performance and service vesting conditions.

Total share-based compensation expense was $15 million for the three months ended April 30, 2011 and $14 million for the three months ended May 1, 2010.

At April 30, 2011, we had approximately $166 million of unrecognized share-based compensation expense (before forfeitures and capitalization), which is expected to be recognized over a weighted average period of 3.6 years.