SHARE-BASED AWARDS AND OPTIONS

3 Months Ended

Aug. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:



	Three Months Ended
	August 31, 2016		August 31, 2015

	(in thousands)

Share-based compensation expense	$	7,619	$	6,467
Income tax benefit	$	3,572	$	2,358

Share-Based Awards

The following table summarizes the changes in unvested share-based awards for the three months ended August 31, 2016:



	Shares		Weighted-Average Grant-Date Fair Value
	(in thousands)

Unvested at May 31, 2016	1,606		$	37.25
Granted	418		74.18
Vested	(687	)	30.46
Forfeited	(18	)	40.85
Unvested at August 31, 2016	1,319		$	48.95

The total fair value of share-based awards vested during the three months ended August 31, 2016 and August 31, 2015 was $20.9 million and $15.7 million, respectively.

For these share-based awards, we recognized compensation expense of $7.0 million and $6.1 million during the three months ended August 31, 2016 and August 31, 2015, respectively. As of August 31, 2016, there was $56.6 million of unrecognized compensation expense related to unvested share-based awards that we expect to recognize over a weighted-average period of 2.3 years. Our share-based award plans provide for accelerated vesting under certain conditions.

Stock Options

Stock options are granted with an exercise price equal to 100% of fair market value of our common stock on the date of grant and have a term of ten years. Stock options granted before fiscal 2015 vest in equal installments on each of the first four anniversaries of the grant date. Stock options granted during fiscal 2015 and thereafter vest in equal installments on each of the first three anniversaries of the grant date. During the three months ended August 31, 2016 and August 31, 2015, we granted 72,733 and 72,393 stock options, respectively. Our stock option plans provide for accelerated vesting under certain conditions.

The following summarizes changes in unvested stock option activity for the three months ended August 31, 2016:



	Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)				(years)	(in millions)
Outstanding at May 31, 2016	811		$	31.81	5.8	$	36.8
Granted	73		74.66
Forfeited	(1	)	22.93
Exercised	(111	)	20.14
Outstanding at August 31, 2016	772		$	37.56	6.4	$	29.9

Options vested and exercisable at August 31, 2016	515		$	29.18	5.1	$	24.2

We recognized compensation expense for stock options of $0.4 million and $0.2 million during the three months ended August 31, 2016 and August 31, 2015, respectively. The aggregate intrinsic value of stock options exercised during the three months ended August 31, 2016 and August 31, 2015 was $6.1 million and $2.7 million, respectively. As of August 31, 2016, we had $3.7 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.1 years.

The weighted-average grant-date fair value of each stock option granted during the three months ended August 31, 2016 and August 31, 2015 was $21.87 and $15.60, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:



	Three Months Ended
	August 31, 2016	August 31, 2015
Risk-free interest rate	1.05%	1.62%
Expected volatility	31.58%	28.65%
Dividend yield	0.06%	0.10%
Expected term (years)	5	5

The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Our assumption on expected volatility is based on our historical volatility. The dividend yield assumption is calculated using our average stock price over the preceding year and the annualized amount of our most current quarterly dividend per share. We based our assumptions on the expected term of the options on our analysis of the historical exercise patterns of the options and our assumption on the future exercise pattern of options.