Stock Incentive Plan

12 Months Ended

Jan. 29, 2022

Share-based Payment Arrangement [Abstract]

TJX has a Stock Incentive Plan under which options and other share-based awards may be granted to its directors, officers and key employees. The number of shares authorized for issuance under this plan has been approved by TJX’s shareholders, and all share-based compensation awards are made under this plan. The Stock Incentive Plan, as amended with shareholder approval, has provided for the issuance of up to 696 million shares with 28 million shares available for future grants as of January 29, 2022. TJX issues shares under the plan from authorized but unissued common stock.

Total compensation cost related to share-based compensation was $189 million, $59 million and $125 million in fiscal 2022, 2021 and 2020, respectively. As of January 29, 2022, there was $160 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan. That cost is expected to be recognized over a weighted-average period of 2 years.

Stock Options

Options for the purchase of common stock are granted with an exercise price that is 100% of market price on the grant date, generally vest in thirds over a 3-year period starting 1 year after the grant, and have a 10-year maximum term. When options are granted with other vesting terms, the vesting information is reflected in the valuation.

The fair value of options is estimated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:


	Fiscal Year Ended
	January 29, 2022			January 30, 2021			February 1, 2020
Risk-free interest rate	0.84		%	0.28		%	1.65		%
Dividend yield(a)	1.5		%	1.4		%	1.6		%
Expected volatility factor	23.8		%	26.5		%	23.4		%
Expected option life	5.0 years			5.0 years			4.9 years
Weighted average fair value of options issued	$	12.85		$	11.29		$	10.84

(a)The reduction in the yield in fiscal 2021 reflected the temporary suspension of dividends due to the COVID-19 pandemic. TJX calculated an implied dividend yield of 1.4% by anticipating dividends to resume. The decrease in expected dividend yield reflected the suspension of dividend payments during the first nine months of fiscal 2021.

The risk-free interest rate is for periods within the contractual life of the option based on the U.S. Treasury yield curve in effect at the time of grant. The Company uses historical data to estimate option exercises, employee termination behavior and dividend yield within the valuation model. Expected volatility is based on a combination of implied volatility from traded options on the Company’s stock, and historical volatility during a term approximating the expected life of the option granted. The expected option life represents an estimate of the period of time options are expected to remain outstanding based upon historical exercise trends. Employee groups and option characteristics are considered separately for valuation purposes when applicable.

A summary of the status of TJX’s stock options and related weighted average exercise prices (“WAEP”) is presented below:


	Fiscal Year Ended
Shares in thousands	January 29, 2022			January 30, 2021			February 1, 2020
	Options	WAEP		Options	WAEP		Options	WAEP

Outstanding at beginning of year	42,604	$	41.79	45,065	$	36.81	49,053	$	32.02
Granted	5,324	70.48		6,268	57.32		6,150	56.74
Exercised	(7,160)	32.04		(8,239)	25.68		(9,518)	24.40
Forfeitures	(535)	57.55		(490)	52.96		(620)	46.37
Outstanding at end of year	40,233	$	47.11	42,604	$	41.79	45,065	$	36.81
Options exercisable at end of year	29,159	$	40.93	30,659	$	36.05	32,276	$	31.04

The total intrinsic value of options exercised was $275 million in fiscal 2022, $279 million in fiscal 2021 and $293 million in fiscal 2020.

The following table summarizes information about stock options outstanding that were expected to vest and stock options outstanding that were exercisable as of January 29, 2022:


	Shares (in thousands)	Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contract Life	WAEP
Options outstanding expected to vest(a)	10,281	$	83,586	8.9 years	$	63.25
Options exercisable	29,159	$	887,932	5.0 years	$	40.93
Total outstanding options vested and expected to vest	39,440	$	971,518	6.0 years	$	46.75

(a)Reflects 11 million unvested options, net of anticipated forfeitures.

Stock Awards

TJX grants restricted stock units and performance share units under the Stock Incentive Plan. Restricted stock units and performance share units are collectively referred to as stock awards. These awards were granted without a purchase price to the recipient and are subject to vesting conditions. Vesting conditions for performance share units include specified performance criteria, generally for a period of three fiscal years. The grant date fair value of the stock awards is charged to income over the requisite service period during which the recipient must remain employed. The fair value of the stock awards is determined at date of grant in accordance with ASC Topic 718 and, for performance share units, assumes that performance goals will be achieved at target. Performance share units and related compensation costs recognized are adjusted, as applicable, for performance above or below the target specified in the award.

During fiscal 2022 and fiscal 2021, modifications were approved to previously-granted nonvested performance share unit awards. Under ASC Topic 718 these modifications required that the fair value of these awards be adjusted to reflect the fair value on the date of the modification and resulted in a share-based compensation charge of $37 million in fiscal 2022 and $16 million in fiscal 2021.

A summary of the status of the Company’s non-vested stock awards and changes during fiscal 2022 is presented below:


In thousands except grant date fair value	Restricted Stock Units	Performance Share Units	Total Stock Awards	Weighted Average Grant Date Fair Value
Nonvested at beginning of year	1,799	1,122	2,921	$	51.36
Granted	513	307	820	65.53
Vested	(460)	(378)	(838)	52.77
Forfeited	(16)	(4)	(20)	60.24
Modification	—	(115)	(115)	54.99
Nonvested at end of year	1,836	932	2,768	58.91

There were 819,587 units with a weighted average grant date fair value of $65.53, granted in fiscal 2022, 857,216 units, with a weighted average grant date fair value of $56.24, granted in fiscal 2021, and 1,001,849 units, with a weighted average grant date fair value of $53.20, granted in fiscal 2020. The fair value of awards that vested was $44 million in fiscal 2022, $57 million in fiscal 2021, and $38 million in fiscal 2020.

The nonvested performance share units are based on the target level of performance achievement under the awards. The actual payout of performance share units will depend on performance results for the award cycle.

Other Awards

TJX also awards deferred shares to its outside directors under the Stock Incentive Plan. As of the end of fiscal 2022, a total of 557,241 of these deferred shares were outstanding under the plan.