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STOCK-BASED COMPENSATION | 12 Months Ended
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Feb. 02, 2025
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Omnibus Stock Incentive Plans The Home Depot, Inc. Omnibus Stock Incentive Plan, as Amended and Restated May 19, 2022 (the “Omnibus Plan”) and The Home Depot, Inc. 1997 Omnibus Stock Incentive Plan (the “1997 Plan” and collectively with the Omnibus Plan, the “Plans”) provide that incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units, deferred shares, stock appreciation rights, and other stock-based awards may be issued to certain of our associates and non-employee directors. Under th e Omnibus Plan, the maximum number of shares of our common stock authorized for issuance is 80 million shares plus a number of shares (not to exceed 10 million) related to underlying awards outstanding as of May 19, 2022, which can be returned to the share pool if those awards are subsequently terminated or expire unexercised, or are cancelled, forfeited or lapse for any reason, 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 February 2, 2025, there were approximately 70 million shares available for future grants under the Omnibus Plan. No additional equity awards could be issued from the 1997 Plan after May 26, 2005. The following table presents total stock-based compensation expense, net of estimated forfeitures, including expense related to our ESPPs, and related income tax benefit:
in millions | Fiscal |  | Fiscal |  | Fiscal
2024 |  | 2023 |  | 2022
Pre-tax stock-based compensation expense | $ | 444 |  |  | $ | 382 |  |  | $ | 367 |
Income tax benefit | (92) |  |  | (79) |  |  | (73) |
After-tax stock-based compensation expense | $ | 352 |  |  | $ | 303 |  |  | $ | 294 |
At February 2, 2025, there was $687 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of three years. The award types issued under the Plans are as follows: 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, nonqualified stock options vest at the rate of 25% per year commencing on the second anniversary date of the grant and expire on the tenth anniversary date of the grant. Additionally, a majority of our stock options may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service. There are no incentive stock options outstanding under the Plans. We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model. Our determination of fair value of stock option awards is affected by our stock price as well as assumptions regarding a number of variables. The following table presents 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:
| Fiscal |  | Fiscal |  | Fiscal
| 2024 |  | 2023 |  | 2022
Per share weighted average fair value | $ | 95.50 |  |  | $ | 66.01 |  |  | $ | 70.21 |
Risk-free interest rate | 4.2 | % |  | 3.6 | % |  | 2.5 | %
Expected volatility | 24.6 | % |  | 26.7 | % |  | 27.0 | %
Dividend yield | 2.4 | % |  | 2.8 | % |  | 2.4 | %
Expected term | 6 years |  | 6 years |  | 6 years
The risk-free interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the expected term of the options. Expected volatility is based on a combination of historical and implied volatility of our stock. The expected term is based on an analysis of historical and expected future exercise patterns. The following table presents a summary of stock option activity by number of shares and weighted average exercise price during fiscal 2024:
shares in thousands | Number of Shares |  | Weighted Average Exercise Price
Outstanding at beginning of year | 3,085 |  |  | $ | 189.97 |
Granted | 175 |  |  | 383.15 |
Exercised | (1,036) |  |  | 138.64 |
Forfeited | (23) |  |  | 306.00 |
Outstanding at end of year | 2,201 |  |  | 228.23 |
The following table presents the total intrinsic value of stock options exercised:
in millions | Fiscal |  | Fiscal |  | Fiscal
2024 |  | 2023 |  | 2022
Total intrinsic value of stock options exercised | $ | 254 |  |  | $ | 152 |  |  | $ | 61 |
The following table presents details regarding outstanding and exercisable stock options at February 2, 2025:
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 | 2,201 |  |  | $ | 404 |  |  | 5.0 years |  | $ | 228.23 |
Exercisable | 1,411 |  |  | 320 |  |  | 3.6 years |  | 185.43 |
Shares of common stock issued from stock option exercises may be issued from authorized and unissued common stock or treasury stock. Restricted Stock Awards. Restrictions on the restricted stock issued under the Plans generally lapse over various periods up to five years. At the grant date of the award, recipients of restricted stock are granted voting rights and generally receive dividends on unvested shares, paid in the form of cash on each dividend payment date. Dividends paid on unvested shares were immaterial for fiscal 2024, fiscal 2023, and fiscal 2022. Additionally, the majority of our restricted stock 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 restricted stock is based on the closing stock price on the date of grant and is expensed over the period during which the restrictions lapse. Restricted Stock Units. Each restricted stock unit entitles the associate to one share of common stock to be received upon vesting up to five years after the grant date. Additionally, the majority of these awards may become non-forfeitable upon the associate reaching age 60, provided the associate has had five years of continuous service. Recipients of restricted stock units have no voting rights until the vesting of the award. Recipients receive dividend equivalents that accrue on unvested units and are paid out in the form of additional shares of stock on the vesting date. The fair value of restricted stock units is based on the closing stock price on the date of grant and is expensed over the period during which the units vest. The following table presents a summary of restricted stock and restricted stock unit activity during fiscal 2024:
shares in thousands | Number of Shares |  | Weighted Average Grant Date Fair Value
Nonvested at beginning of year | 3,033 |  |  | $ | 277.09 |
Granted (1) | 1,330 |  |  | 375.21 |
Vested | (1,113) |  |  | 260.05 |
Forfeited | (200) |  |  | 315.04 |
Nonvested at end of year | 3,050 |  |  | 323.61 |
————— (1) Includes replacement restricted stock awards with service-based vesting conditions issued in connection with the SRS acquisition (see Note 1 3). The following table presents the total fair value of restricted stock and restricted stock units vested:
in millions | Fiscal |  | Fiscal |  | Fiscal
2024 |  | 2023 |  | 2022
Total fair value vested | $ | 429 |  |  | $ | 312 |  |  | $ | 387 |
Performance Share Awards. We also grant performance share awards under the Plans. Recipients of performance share awards have no voting rights until the shares are issued following completion of the performance period. Dividend equivalents accrue on performance shares (as reinvested shares) and are paid upon the payout of the award based upon the actual number of shares earned. Certain of these performance share awards provide for the issuance of shares of our common stock at the end of a three-year performance cycle based upon our performance against target average ROIC and operating profit over that performance cycle. These awards become non-forfeitable upon the associate’s attainment of age 60, provided the associate has had five years of continuous service and minimum performance targets are achieved. The fair value of these performance share awards is based on the closing stock price on the date of grant. Separately, in relation to the SRS acquisition, we also granted performance share awards to various SRS employees. These awards provide for the issuance of shares of our common stock at the end of a five-year performance period. A portion of these awards are subject to the achievement of SRS EBITDA and sales targets, and a portion of these awards are subject to market conditions based on our stock price performance. The fair value of the portion of the awards subject to the achievement of EBITDA and sales targets were valued based on the closing stock price on the grant date. The portion of the awards subject to market conditions were valued using a Monte Carlo simulation on the date of grant. The following table presents the per share weighted average fair value and the assumptions used in the Monte Carlo simulation for the market-based awards:
| Fiscal |  |  |  |
| 2024 |  |  |  |
Per share weighted average fair value | $ | 125.92 |  |  |  |  |
Risk-free interest rate | 4.1 | % |  |  |  |
Expected volatility | 25.4 | % |  |  |  |
Dividend yield | 2.5 | % |  |  |  |
Award term | 5 years |  |  |  |
The risk-free interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the term of the award. Expected volatility is based on a combination of historical and implied volatility of our stock. The award term is based on the vesting period of the award. The following table presents a summary of performance share activity during fiscal 2024:
shares in thousands | Number of Shares |  | Weighted Average Grant Date Fair Value
Nonvested at beginning of year | 353 |  |  | $ | 297.25 |
Granted (1) | 1,146 |  |  | 295.30 |
Vested | (223) |  |  | 292.75 |
Forfeited | (68) |  |  | 293.86 |
Nonvested at end of year | 1,208 |  |  | 296.42 |
————— (1) Includes performance share awards issued in relation to the SRS acquisition. The following table presents the total fair value of performance shares vested:
in millions | Fiscal |  | Fiscal |  | Fiscal
2024 |  | 2023 |  | 2022
Total fair value vested | $ | 83 |  |  | $ | 100 |  |  | $ | 92 |
Deferred Shares. We grant awards of deferred shares to non-employee directors under the Plans. Each deferred share entitles the non-employee director to one share of common stock to be received following termination of Board service. Recipients of deferred shares have no voting rights and receive dividend equivalents that accrue and are paid out in the form of additional shares of stock upon payout of the underlying shares following termination of service. The fair value of the deferred shares is based on the closing stock price on the date of grant and is expensed immediately upon grant. The following table presents deferred shares granted to non-employee directors:
shares in thousands | Fiscal |  | Fiscal |  | Fiscal
2024 |  | 2023 |  | 2022
Deferred shares granted to non-employee directors | 15 |  |  | 19 |  |  | 19 |
Employee Stock Purchase Plans We maintain two ESPPs: a U.S. and a non-U.S. plan. 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 February 2, 2025, there were approximately 14 million shares available under the U.S. plan and approximately 18 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 2024, there were approximately 1 million shares purchased under the ESPPs at an average price of $309.59. Under the outstanding ESPPs at February 2, 2025, associates have contributed $31 million to purchase shares at 85% of the stock’s fair market value on the last day of the current purchase period, June 30, 2025.

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