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Share-based payments | 12 Months Ended
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Feb. 02, 2024
Share-based payments |
Share-based payments | 9.Share-based payments ​ The Company accounts for share-based payments in accordance with applicable accounting standards, under which the fair value of each award is separately estimated and amortized into compensation expense over the service period. The fair value of the Company’s stock option grants are estimated on the grant date using the Black-Scholes-Merton valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The fair value of the Company’s other share-based awards discussed below are estimated using the Company’s closing stock price on the grant date. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. ​ On May 26, 2021, the Company’s shareholders approved the Dollar General Corporation 2021 Stock Incentive Plan (“2021 Plan”), which replaced the Company’s 2007 Stock Incentive Plan (“2007 Plan”). The Plans allow the granting of stock options, stock appreciation rights, and other stock-based awards or dividend equivalent rights to key employees, directors, consultants or other persons having a service relationship with the Company, its subsidiaries and certain of its affiliates. Upon the effective date of the 2021 Plan, no new awards may be granted under the 2007 Plan. Awards previously granted under the 2007 Plan remain outstanding in accordance with their terms. The number of shares of Company common stock authorized for grant under the 2021 Plan is 11,838,143. ​ Generally, share-based awards issued by the Company are in the form of stock options, restricted stock units and performance share units, and unless noted otherwise, the disclosures that follow refer to such awards. With limited exceptions, stock options and restricted stock units granted to employees generally vest ratably on an annual basis over four-year and three-year periods, respectively. Awards granted to board members generally vest over a one-year period. The number of performance share units earned are based on performance criteria measured over a period of one to three years, and such awards generally vest over a three-year period. With limited exceptions, the performance share unit and restricted stock unit awards are payable in shares of common stock on the vesting date. ​ The weighted average for key assumptions used in determining the fair value of all stock options granted in the years ended February 2, 2024, February 3, 2023, and January 28, 2022, and a summary of the methodology applied to develop each assumption, are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | February 2, |  | February 3, |  | January 28, |
​ | ​ | 2024 | ​ | 2023 | ​ | 2022 |
Expected dividend yield |  | 1.5 | % | 1.0 | % | 0.9 | %
Expected stock price volatility |  | 27.7 | % | 25.4 | % | 26.5 | %
Weighted average risk-free interest rate |  | 4.1 | % | 2.4 | % | 0.8 | %
Expected term of options (years) |  | 4.7 | ​ | 4.8 | ​ | 4.9 | ​
​ Expected dividend yield - This is an estimate of the expected dividend yield on the Company’s stock. An increase in the dividend yield will decrease compensation expense. ​ Expected stock price volatility - This is a measure of the amount by which the price of the Company’s common stock has fluctuated or is expected to fluctuate, calculated based upon historical volatility. An increase in the expected volatility will increase compensation expense. Weighted average risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a term approximating the expected life of the option. An increase in the risk-free interest rate will increase compensation expense. Expected term of options - This is the period of time over which the options granted are expected to remain outstanding. An increase in the expected term will increase compensation expense. ​ A summary of the Company’s stock option activity during the year ended February 2, 2024 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Average |  | Remaining |  | ​ | ​ |
​ | ​ | Options | ​ | Exercise | ​ | Contractual | ​ | Intrinsic |
(Intrinsic value amounts reflected in thousands) | ​ | Issued | ​ | Price | ​ | Term in Years | ​ | Value |
Balance, February 3, 2023 |  | 2,522,296 | ​ | $ | 162.58 | ​ | ​ | ​ | ​ | ​ | ​
Granted |  | 812,715 | ​ |  | 170.94 | ​ | ​ | ​ | ​ | ​ | ​
Exercised |  | (350,240) | ​ |  | 97.45 | ​ | ​ | ​ | ​ | ​ | ​
Canceled or expired |  | (571,129) | ​ |  | 207.54 | ​ | ​ | ​ | ​ | ​ | ​
Balance, February 2, 2024 |  | 2,413,642 | ​ | $ | 164.21 |  | 6.7 | ​ | $ | 26,616 | ​
Exercisable at February 2, 2024 |  | 1,065,948 | ​ | $ | 141.49 |  | 4.9 | ​ | $ | 21,259 | ​
​ The weighted average grant date fair value per share of options granted was $44.97, $52.06 and $42.89 during 2023, 2022 and 2021, respectively. The intrinsic value of options exercised during 2023, 2022 and 2021, was $19.0 million, $62.7 million and $132.3 million, respectively. ​ The number of performance share unit awards earned is based upon the Company’s financial performance as specified in the award agreement. A summary of performance share unit award activity during the year ended February 2, 2024 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Units |  | Intrinsic |
(Intrinsic value amounts reflected in thousands) | ​ | Issued | ​ | Value |
Balance, February 3, 2023 |  | 314,897 | ​ | ​ | ​ | ​
Granted |  | 115,197 | ​ | ​ | ​ | ​
Converted to common stock |  | (175,476) | ​ | ​ | ​ | ​
Canceled |  | (80,458) | ​ | ​ | ​ | ​
Balance, February 2, 2024 |  | 174,160 | ​ | $ | 23,714 | ​
​ All performance share unit awards at February 2, 2024 are unvested, and the number of such awards which will ultimately vest will be based in part on the Company’s financial performance in future years. The weighted average grant date fair value per share of performance share units granted was $208.13, $214.25 and $193.55 during 2023, 2022 and 2021, respectively. ​ A summary of restricted stock unit award activity during the year ended February 2, 2024 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Units |  | Intrinsic |
(Intrinsic value amounts reflected in thousands) | ​ | Issued | ​ | Value |
Balance, February 3, 2023 |  | 337,249 | ​ | ​ | ​ | ​
Granted |  | 221,734 | ​ | ​ | ​ | ​
Converted to common stock |  | (140,507) | ​ | ​ | ​ | ​
Canceled |  | (48,013) | ​ | ​ | ​ | ​
Balance, February 2, 2024 |  | 370,463 | ​ | $ | 50,442 | ​
​ The weighted average grant date fair value per share of restricted stock units granted was $193.78, $223.51 and $193.76 during 2023, 2022 and 2021, respectively. ​ At February 2, 2024, the total unrecognized compensation cost related to unvested stock-based awards was $69.6 million with an expected weighted average expense recognition period of 2.0 years. ​ The fair value method of accounting for share-based awards resulted in share-based compensation expense (a component of SG&A expenses) and a corresponding reduction in income before and net of income taxes as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Stock | ​ | Performance | ​ | Restricted | ​ | ​ | ​ |
(In thousands) |  | Options |  | Share Units |  | Stock Units |  | Total |
Year ended February 2, 2024 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Pre-tax | ​ | $ | 19,400 | ​ | $ | 1,732 | ​ | $ | 30,759 | ​ | $ | 51,891 | ​
Net of tax | ​ | $ | 15,210 | ​ | $ | 1,358 | ​ | $ | 24,115 | ​ | $ | 40,683 | ​
Year ended February 3, 2023 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Pre-tax | ​ | $ | 20,502 | ​ | $ | 26,920 | ​ | $ | 25,249 | ​ | $ | 72,671 | ​
Net of tax | ​ | $ | 15,893 | ​ | $ | 20,868 | ​ | $ | 19,573 | ​ | $ | 56,334 | ​
Year ended January 28, 2022 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Pre-tax | ​ | $ | 21,452 | ​ | $ | 33,234 | ​ | $ | 23,492 | ​ | $ | 78,178 | ​
Net of tax | ​ | $ | 15,853 | ​ | $ | 24,560 | ​ | $ | 17,361 | ​ | $ | 57,774 | ​
​

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