Stock-based Compensation

The Company's stock-based compensation awards are currently issued under the 2010 Incentive Plan, which was approved by its stockholders on August 5, 2010. However, any prior awards granted under the 1997 Incentive Plan remain subject to the terms of that plan. Any awards that expire, are forfeited, or are surrendered to the Company in satisfaction of taxes are available for issuance under the 2010 Incentive Plan.

Stock-based compensation awards that may be issued under the 2010 Incentive Plan include, but are not limited to, (i) stock options, (ii) restricted stock, and (iii) RSUs. In recent years, the Company's annual grants of stock-based compensation awards to its employees primarily consisted of stock options and RSUs. However, in Fiscal 2016, the annual grants consisted entirely of RSUs, as the Company elected to issue service-based RSUs in lieu of stock options. Additionally, new vesting provisions for certain awards granted to retirement-eligible employees were introduced. Specifically, beginning in Fiscal 2016, for certain service-based and performance-based RSUs granted to retirement-eligible employees, or employees who will become retirement-eligible prior to the end of the awards' respective stated vesting periods, vesting continues post-retirement for all or a portion of the remaining unvested RSUs. Accordingly, the related stock-based compensation expense is recognized on an accelerated basis over a term commensurate with the period that the employee is required to provide service in order to vest in the award.

Refer to Note 20 in the Fiscal 2015 10-K for additional details surrounding the Company's stock-based compensation awards, including information related to vesting terms, service and performance conditions, and payout percentages.

Impact on Results

A summary of total stock-based compensation expense and the related income tax benefits recognized during the three-month and nine-month periods ended December 26, 2015 and December 27, 2014 is as follows:



	Three Months Ended							Nine Months Ended
	December 26, 2015				December 27, 2014			December 26, 2015				December 27, 2014
	(millions)
Compensation expense	$	25		^(a)	$	18		$	79		^(a)	$	60
Income tax benefit	$	(10	)		$	(7	)	$	(30	)		$	(23	)


^(a)	Includes approximately $9 million of accelerated stock-based compensation expense recorded within restructuring and other charges in the Company's unaudited interim consolidated statements of income during the three-month and nine-month periods ended December 26, 2015 (see Note 9). All other stock-based compensation expense was recorded within SG&A expenses.

The Company issues its annual grants of stock-based compensation awards in the first half of each fiscal year. Due to the timing of the annual grants and other factors, including the composition of the retirement-eligible employee population, stock-based compensation expense recognized during the three-month and nine-month periods ended December 26, 2015 is not indicative of the level of compensation expense expected to be incurred for the full Fiscal 2016.

Stock Options

A summary of stock option activity under all plans for the nine months ended December 26, 2015 is as follows:



	Number of Options
	(thousands)
Options outstanding at March 28, 2015	3,225
Granted	—
Exercised	(588	)
Cancelled/Forfeited	(150	)
Options outstanding at December 26, 2015	2,487

Restricted Stock Awards and Service-based RSUs

The fair values of restricted stock awards granted to non-employee directors are determined based on the fair value of the Company's Class A common stock on the date of grant. The weighted-average grant date fair values of restricted stock awards granted, which entitle holders to receive cash dividends in connection with the payments of dividends on the Company's Class A common stock, were $131.40 and $162.36 per share during the nine-month periods ended December 26, 2015 and December 27, 2014, respectively.

The fair values of service-based RSUs granted to certain of the Company's senior executives, as well as to certain of its other employees, are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for any awards not entitled to accrue dividend equivalents while outstanding. The weighted-average grant date fair values of service-based RSU awards granted were $126.06 and $167.26 per share during the nine-month periods ended December 26, 2015 and December 27, 2014, respectively.

A summary of restricted stock and service-based RSU activity during the nine months ended December 26, 2015 is as follows:



	Number of Shares
	Restricted Stock		Service-based RSUs
	(thousands)
Nonvested at March 28, 2015	5		47
Granted	8		495
Vested	(3	)	(13	)
Forfeited	(1	)	(36	)
Nonvested at December 26, 2015	9		493

Performance-based RSUs

The fair values of the Company's performance-based RSUs that are not subject to a market condition in the form of a total shareholder return ("TSR") modifier are based on the fair value of the Company's Class A common stock on the date of grant, adjusted to reflect the absence of dividends for those securities that are not entitled to dividend equivalents. The weighted-average grant date fair values of performance-based RSUs that do not contain a TSR modifier granted during the nine-month periods ended December 26, 2015 and December 27, 2014 were $126.71 and $157.10 per share, respectively.

The fair values of the Company's performance-based RSUs with a TSR modifier are determined on the date of grant using a Monte Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of the Company achieving various stock price levels to determine its expected TSR performance ranking. No such awards were granted during the nine months ended December 26, 2015. The weighted-average grant date fair value of performance-based RSUs with a TSR modifier granted during the nine months ended December 27, 2014 was $169.47.

A summary of performance-based RSU activity during the nine months ended December 26, 2015 is as follows:



	Number of Shares
	Performance-based RSUs — without TSR Modifier		Performance-based RSUs — with TSR Modifier
	(thousands)
Nonvested at March 28, 2015	697		214
Granted	339		—
Change due to performance/market condition achievement	(8	)	(20	)
Vested	(293	)	(50	)
Forfeited	(43	)	(2	)
Nonvested at December 26, 2015	692		142