Stock-Based Compensation Plans

9 Months Ended

May 12, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

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 Plan). The Sixth Plan initially authorized 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 settled in shares, and delivered to participants annually, net of minimum statutory withholding taxes.

As required by the Company’s Sixth Plan, in conjunction with the special cash dividend discussed in Note 5, adjustments were made to awards outstanding on the dividend record date to preserve their value following the special cash dividend, as follows: (i) the number of shares subject to outstanding RSUs was increased; and (ii) the exercise prices of outstanding stock options were reduced and the number of shares subject to such options was increased. Approximately 2,905,000 stock options were adjusted, and approximately 9,676,000 RSUs were adjusted. These adjustments did not result in additional share-based compensation expense, as the fair value of the outstanding awards immediately following the payment of the special cash dividend was equal to the fair value immediately prior to such distribution. As further required by the Sixth Plan, the maximum number of shares issuable under the Sixth Plan was proportionally adjusted, which resulted in an additional 778,000 shares available to be granted.

Summary of Stock Option Activity

All outstanding stock options were fully vested and exercisable at May 12, 2013 and September 2, 2012. The following table summarizes stock option transactions during the first thirty-six weeks 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	(1,302	)	35.97
Special cash dividend	221		N/A
Outstanding at May 12, 2013	2,080		$	39.63	1.68	$	146

(1) The difference between the exercise price and market value of common stock at May 12, 2013.

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 thirty-six weeks of 2013 and 2012 are provided in the following table:

	36 Weeks Ended
	May 12, 2013		May 6, 2012
Actual tax benefit realized for stock options exercised	$	30	$	29
Intrinsic value of stock options exercised (1)	$	84	$	82

(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 May 12, 2013, 11,116,000 shares were available to be granted as RSUs.

The following awards were outstanding at the end of the first thirty-six weeks of 2013:

• 9,443,000 time-based RSUs that vest upon continued employment over specified periods of time;

• 376,000 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

• 350,000 performance-based RSUs to be granted to executive officers of the Company upon achievement of 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 included in the table below and the Company recognized compensation expense for these awards as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first thirty-six weeks 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	4,192		90.99
Vested and delivered	(3,842	)	67.15
Forfeited	(173	)	76.47
Special cash dividend	732		N/A
Non-vested at May 12, 2013	10,169		$	73.40

The remaining unrecognized compensation cost related to non-vested RSUs at May 12, 2013, was $582 and the weighted-average period of time over which this cost will be recognized is 1.76 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						36 Weeks Ended
	May 12, 2013			May 6, 2012			May 12, 2013			May 6, 2012
Total stock-based compensation expense before income taxes	$	51		$	45		$	210		$	179
Less recognized income tax benefit	(16		)	(15		)	(69		)	(59		)
Total stock-based compensation expense, net of income taxes	$	35		$	30		$	141		$	120