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Common Stock and Stock-Based Compensation | 12 Months Ended
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May 31, 2018
Share-based Compensation [Abstract] |
Common Stock and Stock-Based Compensation |
NOTE 11 — Common Stock and Stock-Based Compensation
The authorized number of shares of Class A Common Stock, no par value, and Class B Common Stock, no par value, are 400 million and 2,400 million, respectively. Each share of Class A Common Stock is convertible into one share of Class B Common Stock. Voting rights of Class B Common Stock are limited in certain circumstances with respect to the election of directors. There are no differences in the dividend and liquidation preferences or participation rights of the holders of Class A and Class B Common Stock. From time to time, the Company’s Board of Directors authorizes share repurchase programs for the repurchase of Class B Common Stock. The value of repurchased shares is deducted from Total shareholders‘ equity through allocation to Capital in excess of stated value and Retained earnings. The NIKE, Inc. Stock Incentive Plan (the “Stock Incentive Plan”) provides for the issuance of up to 718 million previously unissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance-based awards. The exercise price for stock options and stock appreciation rights may not be less than the fair market value of the underlying shares on the date of grant. A committee of the Board of Directors administers the Stock Incentive Plan. The committee has the authority to determine the employees to whom awards will be made, the amount of the awards and the other terms and conditions of the awards. Substantially all stock option grants outstanding under the Stock Incentive Plan are granted in the first quarter of each fiscal year, vest ratably over four years and expire ten years from the date of grant. The following table summarizes the Company’s total stock-based compensation expense recognized in Cost of sales or Operating overhead expense, as applicable:
|  | Year Ended May 31,
(In millions) |  | 2018 |  | 2017 |  | 2016
Stock options(1) |  | $ | 149 |  |  | $ | 145 |  |  | $ | 171 |
ESPPs |  | 34 |  |  | 36 |  |  | 31 |
Restricted stock |  | 35 |  |  | 34 |  |  | 34 |
TOTAL STOCK-BASED COMPENSATION EXPENSE |  | $ | 218 |  |  | $ | 215 |  |  | $ | 236 |
(1) | Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option vesting upon retirement. Accelerated stock option expense was $18 million, $14 million and $30 million for the years ended May 31, 2018, 2017 and 2016, respectively.
As of May 31, 2018, the Company had $195 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.0 years. The weighted average fair value per share of the options granted during the years ended May 31, 2018, 2017 and 2016, computed as of the grant date using the Black-Scholes pricing model, was $9.82, $9.38 and $12.66, respectively. The weighted average assumptions used to estimate these fair values are as follows:
|  | Year Ended May 31,
|  | 2018 |  | 2017 |  | 2016
Dividend yield |  | 1.2 | % |  | 1.1 | % |  | 1.0 | %
Expected volatility |  | 16.4 | % |  | 17.4 | % |  | 23.6 | %
Weighted average expected life (in years) |  | 6.0 |  |  | 6.0 |  |  | 5.8 |
Risk-free interest rate |  | 2.0 | % |  | 1.3 | % |  | 1.7 | %
The Company estimates the expected volatility based on the implied volatility in market traded options on the Company’s common stock with a term greater than one year, along with other factors. The weighted average expected life of options is based on an analysis of historical and expected future exercise patterns. The 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. The following summarizes the stock option transactions under the plan discussed above:
|  | Shares(1) |  | Weighted Average Option Price
|  | (In millions) |  |
Options outstanding May 31, 2015 |  | 116.2 |  |  | $ | 23.50 |
Exercised |  | (22.5 | ) |  | 17.75 |
Forfeited |  | (2.3 | ) |  | 39.96 |
Granted |  | 20.6 |  |  | 56.41 |
Options outstanding May 31, 2016 |  | 112.0 |  |  | 30.38 |
Exercised |  | (17.1 | ) |  | 20.42 |
Forfeited |  | (2.3 | ) |  | 49.47 |
Granted |  | 12.2 |  |  | 57.81 |
Options outstanding May 31, 2017 |  | 104.8 |  |  | 34.79 |
Exercised |  | (24.1 | ) |  | 25.07 |
Forfeited |  | (4.3 | ) |  | 55.31 |
Granted |  | 16.8 |  |  | 59.08 |
Options outstanding May 31, 2018 |  | 93.2 |  |  | $ | 40.73 |
Options exercisable at May 31, |  |  |  |
2016 |  | 66.5 |  |  | $ | 21.48 |
2017 |  | 67.9 |  |  | 26.03 |
2018 |  | 58.5 |  |  | 31.60 |
(1) | Includes stock appreciation rights transactions.
The weighted average contractual life remaining for options outstanding and options exercisable at May 31, 2018 was 5.7 years and 4.4 years, respectively. The aggregate intrinsic value for options outstanding and exercisable at May 31, 2018 was $2,896 million and $2,352 million, respectively. The aggregate intrinsic value was the amount by which the market value of the underlying stock exceeded the exercise price of the options. The total intrinsic value of the options exercised during the years ended May 31, 2018, 2017 and 2016 was $889 million, $594 million and $946 million, respectively. In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount to the market price under employee stock purchase plans (ESPPs). Subject to the annual statutory limit, employees are eligible to participate through payroll deductions of up to 10% of their compensation. At the end of each six-month offering period, shares are purchased by the participants at 85% of the lower of the fair market value at the beginning or the end of the offering period. Employees purchased 3.1 million, 3.1 million and 2.5 million shares during each of the three years ended May 31, 2018, 2017 and 2016, respectively. From time to time, the Company grants restricted stock and restricted stock units to key employees under the Stock Incentive Plan. The number of shares underlying such awards granted to employees during the years ended May 31, 2018, 2017 and 2016 were 1.8 million, 0.4 million and 1.0 million, respectively, with weighted average values per share of $62.51, $57.59 and $54.87, respectively. Recipients of restricted stock are entitled to cash dividends and to vote their respective shares throughout the period of restriction. Recipients of restricted stock units are entitled to dividend equivalent cash payments upon vesting. The value of all grants of restricted stock and restricted stock units was established by the market price on the date of grant. During the years ended May 31, 2018, 2017 and 2016, the aggregate fair value of restricted stock and restricted stock units vested was $113 million, $60 million and $49 million, respectively, determined as of the date of vesting. As of May 31, 2018, the Company had $104 million of unrecognized compensation costs from restricted stock and restricted stock units to be recognized in Operating overhead expense over a weighted average period of 2.4 years.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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