Stock-Based Compensation Plans

3 Months Ended

Nov. 25, 2012

Stock-Based Compensation Plans

Note 6—Stock-Based Compensation Plans

In the second quarter of fiscal 2012, the Fifth Restated 2002 Stock Incentive Plan was amended following shareholder approval and is now referred to as the Sixth Restated 2002 Stock Incentive Plan (Sixth Restated 2002 Plan). The Sixth Restated 2002 Plan authorizes the issuance of 16,000,000 shares (9,143,000 RSUs) of common stock for future grants in addition to shares authorized under the previous plan. Each RSU issued is counted as 1.75 shares toward the limit of shares available. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs. RSUs are delivered to participants annually, net of shares equal to the minimum statutory withholding taxes.

Summary of Stock Option Activity

All outstanding stock options were fully vested and exercisable as of November 25, 2012 and September 2, 2012. The following table summarizes stock option transactions during the first quarter of 2013:

	Number Of Options (in 000’s)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value(1)
Outstanding at September 2, 2012		3,161		$	40.90
Exercised		(256	)		38.42
Outstanding at November 25, 2012		2,905		$	41.12		1.87	$	165

(1) The difference between the exercise price and market value of common stock at November 25, 2012.

The tax benefits realized, derived from the compensation deductions resulting from option exercises, and intrinsic value related to total stock options exercised during the first quarter of 2013 and 2012 are provided in the following table:

	12 Weeks Ended
	November 25, 2012		November 20, 2011
Actual tax benefit realized for stock options exercised	$	6	$	9
Intrinsic value of stock options exercised(1)	$	15	$	26

(1) The difference between the exercise price and market value of common stock measured at each individual exercise date.

Summary of Restricted Stock Unit Activity

At November 25, 2012, 10,188,000 shares were available to be granted as RSUs under the Sixth Restated 2002 Plan.

The following awards were outstanding at November 25, 2012:

• 8,972,000 time-based RSUs that vest upon continued employment over specified periods of time;

• 379,000 performance-based RSUs granted to certain executive officers of the Company for which the performance targets have been met. Further restrictions lapse upon achievement of continued employment over specified periods of time; and

• 325,000 performance-based RSUs to be granted to executive officers of the Company upon achievement of specified performance targets for fiscal 2013, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are not included in the table below.

The following table summarizes RSU transactions during the first quarter of 2013:

	Number of Units (in 000’s)			Weighted- Average Grant Date Fair Value
Non-vested at September 2, 2012		9,260		$	66.14
Granted		3,867			90.84
Vested and delivered		(3,741	)		67.32
Forfeited		(35	)		69.84
Non-vested at November 25, 2012		9,351		$	75.87

The remaining unrecognized compensation cost related to non-vested RSUs at November 25, 2012 was $680 and the weighted-average period of time over which this cost will be recognized is 1.9 years.

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans:

	12 Weeks Ended
	November 25, 2012			November 20, 2011
Total stock-based compensation expense before income taxes		93			76
Less recognized income tax benefit		(31	)		(25	)
Total stock-based compensation expense, net of income taxes	$	62		$	51