EMPLOYEE STOCK PLANS

Omnibus Stock Incentive Plans

The Home Depot, Inc. Amended and Restated 2005 Omnibus Stock Incentive Plan (the "2005 Plan") and The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan (the "1997 Plan" and collectively with the 2005 Plan, the "Plans") provide that incentive and nonqualified stock options, stock appreciation rights, restricted stock, performance shares, performance units, and deferred shares may be issued to certain of our associates, officers, and directors. Under the 2005 Plan, the maximum number of shares of our common stock authorized for issuance is 255 million shares, with any award other than a stock option or stock appreciation right reducing the number of shares available for issuance by 2.11 shares. At January 28, 2018, there were 130 million shares available for future grants under the 2005 Plan. No additional equity awards could be issued from the 1997 Plan after the adoption of the 2005 Plan on May 26, 2005.

Stock Options. Under the terms of the Plans, incentive stock options and nonqualified stock options must have an exercise price at or above the fair market value of our stock on the date of the grant. Typically, incentive stock options and nonqualified stock options vest at the rate of 25% per year commencing on the first or second anniversary date of the grant, and expire on the tenth anniversary date of the grant. Additionally, certain stock options may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service.

Stock-based compensation expense and the total intrinsic value of stock options exercised follow.



in millions	Fiscal		Fiscal		Fiscal
in millions	2017		2016		2015
Stock-based compensation expense related to stock options	$	20	$	26	$	26
Total intrinsic value of stock options exercised	223		140		206

The per share weighted average fair value of stock options granted and the assumptions used in determining fair value at the date of grant using the Black-Scholes option-pricing model follow.



	Fiscal			Fiscal			Fiscal
	2017			2016			2015
Per share weighted average fair value	$	21.85		$	20.26		$	18.54
Risk-free interest rate	1.9		%	1.4		%	1.4		%
Assumed volatility	19.4		%	20.7		%	20.8		%
Assumed dividend yield	2.4		%	2.1		%	2.0		%
Assumed lives of options	5 years			5 years			5 years

A summary of stock option activity by number of shares and weighted average exercise price follows.



shares in thousands	Number of Shares		Weighted Average Exercise Price
Outstanding at January 29, 2017	8,720		$	70.69
Granted	648		148.04
Exercised	(2,029	)	48.64
Forfeited	(143	)	122.43
Outstanding at January 28, 2018	7,196		82.85

Details regarding outstanding and exercisable stock options at the end of fiscal 2017 follow.



shares in thousands, dollars in millions, except for per share amounts	Number of Shares	Intrinsic Value		Weighted Average Remaining Life	Weighted Average Exercise Price
Outstanding	7,196	$	895	6 years	$	82.85
Exercisable	3,757	575		4 years	54.13

At January 28, 2018, there were approximately 6 million stock options vested or expected to ultimately vest. At January 28, 2018, there was $23 million of unamortized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted average period of two years.

Restricted Stock and Performance Shares. Restrictions on the restricted stock issued under the Plans generally lapse according to one of the following schedules:


•	the restrictions on the restricted stock lapse over various periods up to five years;


•	the restrictions on 25% of the restricted stock lapse upon the third and sixth anniversaries of the date of issuance with the remaining 50% of the restricted stock lapsing upon the associate’s attainment of age 62; or


•	the restrictions on 25% of the restricted stock lapse upon the third and sixth anniversaries of the date of issuance with the remaining 50% of the restricted stock lapsing upon the earlier of the associate’s attainment of age 60 or the tenth anniversary of the grant date.

We have also granted performance shares under the Plans, the payout of which is dependent on our performance against target average ROIC and operating profit over a three-year performance cycle. Additionally, certain awards may become non-forfeitable upon the associate's attainment of age 60, provided the associate has had five years of continuous service. The fair value of the restricted stock and performance shares is expensed over the period during which the restrictions lapse.

Recognized stock-based compensation expense related to restricted stock and performance shares is presented below.



in millions	Fiscal		Fiscal		Fiscal
in millions	2017		2016		2015
Stock-based compensation expense related to restricted stock and performance shares	$	209	$	199	$	180

A summary of restricted stock and performance shares activity by number of shares and weighted average grant date fair value is presented below.



shares in thousands	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at January 29, 2017	5,452		$	103.41
Granted	1,769		144.12
Vested	(2,093	)	90.25
Forfeited	(399	)	120.38
Outstanding at January 28, 2018	4,729		123.03

At January 28, 2018, there was $337 million of unamortized stock-based compensation expense related to restricted stock and performance shares, which is expected to be recognized over a weighted average period of two years. The total fair value of restricted stock and performance shares that vested during the fiscal year follow.



in millions	Fiscal		Fiscal		Fiscal
in millions	2017		2016		2015
Total fair value vested	$	309	$	354	$	382

Deferred Shares. In fiscal 2017, there were an aggregate of 122,000 deferred shares granted under the Plans compared to 139,000 in fiscal 2016 and 152,000 in fiscal 2015. Each deferred share entitles the associate to one share of common stock to be received up to five years after the grant date of the deferred shares, subject to certain deferral rights of the associate. Additionally, certain awards may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service. Recorded stock-based compensation expense related to deferred shares follows.



in millions	Fiscal		Fiscal		Fiscal
in millions	2017		2016		2015
Stock-based compensation expense related to deferred shares	$	16	$	16	$	15

Employee Stock Purchase Plans

We maintain two ESPPs (U.S. and non-U.S. plans). The plan for U.S. associates is a tax-qualified plan under Section 423 of the Internal Revenue Code. The non-U.S. plan is not a Section 423 plan. At January 28, 2018, there were 20 million shares available under the U.S. plan and 19 million shares available under the non-U.S. plan. The purchase price of shares under the ESPPs is equal to 85% of the stock’s fair market value on the last day of the purchase period, which is a six-month period ending on December 31 and June 30 of each year. During fiscal 2017, there were 1 million shares purchased under the ESPPs at an average price of $143.71. Under the outstanding ESPPs at January 28, 2018, employees have contributed $17 million to purchase shares at 85% of the stock’s fair market value on the last day of the current purchase period (June 30, 2018). Recognized stock-based compensation expense related to ESPPs follows.



in millions	Fiscal		Fiscal		Fiscal
in millions	2017		2016		2015
Stock-based compensation expense related to ESPPs	$	28	$	26	$	23